March 21, 2013 / 10:16 AM / 5 years ago

France must cap proposed supertax at 66 percent - paper

PARIS (Reuters) - France’s top administrative court will tell Socialist President Francois Hollande on Thursday a controversial supertax on millionaires cannot top two-thirds of their earnings, Le Figaro newspaper reported.

France's President Francois Hollande (R) and his companion Valerie Trierweiler (C) attend the annual Representative Council of France's Jewish Associations (CRIF) dinner at the Pavillon d'Armenonville in Paris March 20, 2013. REUTERS/Joel Saget/Pool

Hollande’s plans announced last year for an exceptional 75 percent supertax on personal annual earnings over 1 million euros ($1.30 million) were knocked down by France’s Constitutional Council, which ruled the levy unfair.

His government promised to rework the plan, but sought the guidance of the court to avoid another embarrassing rejection.

Citing unnamed sources, Le Figaro said the court’s financial division concluded that a marginal tax rate higher than 66.66 percent on a single household would risk being rejected once more as confiscatory by the Constitutional Council.

The ruling will be made known later on Thursday. Finance Minister Pierre Moscovici declined to comment on the matter before the ruling but said the government was determined to push ahead with some form of exceptional tax on the super-rich.

“In any case the most wealthy will be asked to make this effort,” he told BFMTV. “It’s an act of solidarity, almost a patriotic act. It’s being done to show that we are all in the same boat, even the most wealthy.”

The 75-percent tax, which was only due to be in place for two years, was never expected to be a big earner for the state but its rejection dealt a painful political blow to Hollande.

Critics argued it would only frighten away France’s most talented tax-payers and investment. Moscovici said there was no evidence that the prospect of the supertax had led to an exodus of France’s most well-heeled taxpayers.

In its original form, the tax would have hit 2,000-3,000 people and raised just a few hundred million euros a year.

Government spokeswoman Najat Vallaud-Belkacem said a bill for the new tax would be brought out “before the summer”.

Reporting by Leigh Thomas; Additional reporting by Ingrid Melander and Sophie Louet; Editing by Michael Roddy

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