France approves 75% ‘supertax' on companies paying salaries of more than $1.38mn
French President Hollande’s plan to introduce a 75 percent tax on companies that pay out salaries of more than one million euros (US$1.38 million) has been approved. It follows a court ruling stating that an individual can't be taxed over 66 percent.
The move has prompted football clubs, business leaders, and
wealthy individuals to strike - some of whom stated they would be
driven into exile by the law.
The original proposal was aimed at individuals who earned more than one million euros annually. However, the Constitutional Council – which has now approved the measure – ruled the tax “unconstitutional” earlier this year. It said that individuals could be taxed a maximum of 66 percent.
The government’s overturn of the proposal followed protests by top officials and actors such as Gerard Depardieu, who was granted Russian citizenship in January after publicly criticizing the plan.
According to a Sunday ruling, the tax will only be levied on companies paying salaries of over $138 million per year. Employers will now have to contribute a 50 percent income tax on the share of wages they pay which exceed that amount. Any other taxes and/or social charges can bring the rate as high as 75 percent. There is, however, a five percent cap of a company’s turnover, according to the Financial Times.
The revamped tax now “conforms to the constitution,” according to the Constitutional Council.
French President Francois Hollande has publicly and repeatedly asserted his support for the economic left, but also stated in March that the move was “not to punish,” adding that he hoped it would encourage lower executive pay while austerity measures and rising unemployment continue to sweep the country.
The Constitutional Council, which gave the green light to the tax during a series of budget rulings, is comprised of former French presidents and judges.
A BVA poll in October showed that only 26 percent of French citizens have a positive opinion of the Socialist president – the worst score for a French leader since polling began some 32 years back.