What May Change with the New French President, Francois Hollande?

As you may already know, France has just learned about a change of political direction with the election of the left-wing candidate, Francois Hollande, as Republic President. The new leader has planned numerous reforms in the state for the next 5 years, with the purpose to re-boost growth by setting a tax-and-spend program.

 

To carry out these reforms, Francois Hollande plans to make savings by taxing the wealthiest part of the population while changing some administration aspects. Indeed, just following its creation, the new government has decided to reduce the presidents and minister’s salaries by 30%. Moreover, savings will be led by staff-cut reforms in some cabinets, especially the Defence cabinet. The president also plans to increase the income tax of the wealthiest people, to arrive at a 45% tax on incomes higher than €150,000 per year and 75% for incomes higher than 1 million Euros. Regarding inheritance tax, the exempted value limit would drop from €159,000 to €100,000. According to his program, the wealth taxes cut by Nicolas Sarkozy will be restored and the returns on capital, essentially received by the well-off households, will be taxed as well like the earned income.  For companies, there would be 3 levels of tax rates according to their size. Francois Hollande also intends to restore the taxation on the working overtime removed by his predecessor, to boost the employment while increasing  the State income simultaneously. Furthermore, the Scellier Law, which allowed some cuts on taxable incomes to buyers who acquire a new property (or under construction) by the end of 2012, will not be renewed.

 

The incomes created with these measures, besides the saving accounts, would be used to re-boost the country’s economy. To counter unemployment, the new President wants to facilitate the integration of youth into the workplace, as well as, reducing the oldest working people’s unemployment. For this, he plans to establish “generation contracts,” the employment of a young person during the last working years of a senior employee would lead to an exemption of the employer’s social security contributions during this period.

The education, which is considered to have deteriorated over the past few years, is one of the Mr. Hollande’s top priorities. The main issue is the decreasing number of teachers and the suppression of their initial training by Nicolas Sakozy. The new president plans to create 60,000 employment positions including teachers especially teachers, but also psychologists and security staff. Amongst these new positions created, Mr. Hollande will enforce the initial training to ensure proper restoration.

Regarding housing, President Hollande wants to boost the construction of accommodations, increase the rate of council houses, and control the rents to avoid abuses. Healthcare and retirement are also important matters in Mr Hollande’s enhancement programme.

 

To be applicable, these reforms have to be voted on by the government; that includes not only the president and the ministers, but also the Parliament which is composed of members who are going to be elected in June by the French. According to the majority in the Parliament will be will greatly affect the outcome of these reforms being either approved or rejected. Now, let’s wait and see! After all, according to world institutions such as IMF, France remains one of the safest nations to own real estate property in. On the contrary, the drop of the euro value and the French mortgage rate represents a real opportunity for foreigners to purchase a property.

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This entry was posted on Sunday, June 3rd, 2012 at 3:00 pm and is filed under French taxes . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “What May Change with the New French President, Francois Hollande?”

  1. DQ Says:

    Hollande is crazy. No wealthy people will agree to this taxation, and this stupid plan will just ensure that the wealthy leave, or remove their money from this country.

    It’s completely ridiculous that the people voted such an idiot into office. Now they will pay for it.

    Much like the Amerikans who voted Adolph Hussein Obama into office — they are paying a very high price for allowing this monster to dictate by presidential order.

    These high tax rates will also ensure that investors do not come to France — if I were to buy property there, it would be done without putting money in any French bank.

    Perhaps the people of France will regret this decision and vote to remove Hollande and reinstate Sarkozy… we’ll see.

  2. DQ Says:

    The wealthy have provided jobs and income to those who work for them — why should they be penalized for making the right choices and decisions that enabled them to make money?

    “Tax the Rich! Tax the Rich!” that is the most ignorant thing I have heard in years — and it’s coming from every country. When the rich don’t cooperate and remove themselves and their funds from the reach of the greedy governments, the folks who worked for them will be out of jobs, which will make things even worse.

    When the rich stop spending money in your town, the restaurants, shops and other businesses will close.

    Nice going Hollande.


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