French government backtracks on contentious savings tax

Finance Minister Pierre Moscovici (left) and Budget Minister Bernard Cazeneuve,
Finance Minister Pierre Moscovici (left) and Budget Minister Bernard Cazeneuve, Reuters/Charles Platiau

France's Socialist government has back-pedalled on its plans to up taxes on popular small saving plans, aimed at digging the country out of its budget deficit.


The move to harmonise tax rates across the small saving schemes at 15.5 percent was approved by the lower house of the National Assembly last week. It aimed to bring in an extra 600 million euros in revenue but soon incurred wrath from groups representing savers, the conservative UMP opposition, as well as within the ranks of the Socialist party itself.

The Budget Minister Bernard Cazeneuve announced in newspaper Le Journal du Dimanche Sunday that the plan has since been scrapped and the tax increase would apply only to certain life insurance policies. That message was reiterated by Finance

Minister Pierre Moscovici on Europe radio 1 who said "we have listened to the concerns of small savers."

The public backlash to the proposed tax harmonisation is part of wider discontent in France at fiscal increases imposed in a governmental bid to meet a 2015 deadline set by the European Union to bring the county's deficit to below 3 percent of total GDP.

Hundreds of protesters clashed Saturday with the police in Western France over a new ecotax that will come in to force in 2014. Three protesters were injured, one of whom lost a hand. Under the plan, all heavy goods vehicles weighing more than 3.5 tonnes will have to pay a fee as they pass through toll gates located around France. Despite the clashes Moscovici maintained Sunday that the ecotax will come into force from the beginning of next year.

Meanwhile French football clubs maintain that they will take industrial action from November to tax players earning over one million euros at a rate of 75 percent.


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