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Economy

French MPs approve flat tax on unearned income

media Economy Minister Bruno Le Maire Brendan Smialowski / AFP

French MPs on Thursday voted for a 30 percent flat tax on unearned income - a measure hailed as a "fiscal revolution" by supporters but damned as a "present to the rich" by the left.

As part of the ongoing debate on the government's 2018 budget, MPs voted 96 to 18 for the fixed-rate tax on income from capital investments after a bitter debate that saw the left's various factions unite against the measure.

The government claims the move will encourage investment in industry and thus create wealth and jobs.

Economy Minister Bruno Le Maire declared it "doubtless the real fiscal revolution of this budget" and predicted that it will "probably improve funding, growth and employment in our country".

He was counting on the "French people's good sense" to ensure that they will invest their savings in businesses, he told the National Assembly.

Handouts to wealthy

But, echoing perceptions that Macron is a "president for the rich", opponents dubbed it a "supergift for the rich" and a "blank cheque" whose benefits are "completely uncertain" to materialise.

Mocking President Emmanuel Macron's claim to be above the traditional left-right political division, Socialist Olivier Faure speculated that Le Maire, a member of the right-wing Republicans until he joined the government, was a "happy man", who was "still on the right" and "has no problem seeing that labour will be more heavily taxed than capital tomorrow".

Communists and members of Jean-Luc Mélenchon France Unbowed joined the chorus of criticism, predicting that the money would not end up in the "real economy".While Republicans MP Marc Le Fur insisted that not all savers were obliged "establish a start-up", most of his party backed the proposal, which was also in the manifesto of their failed presidential candidate, François Fillon.

Cost to exchequer

The government estimates the measure will cost the exchequer 1.3 billion euros in 2018 and 1.9 billion in 2019.

In another measure that has enraged the left, the budget will also cut wealth tax, reducing state income by some 3.2 billion euros.

The National Assembly will vote on the budget as a whole on 24 October.

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