The upper income tax rate sparked outrage amongst business leaders and led some of France’s richer citizens to request tax exile abroad. Among them was renowned actor Gerard Depardieu who was recently granted residence in Belgium.
The Constitutional Council found the temporary two-year rate to be unconstitutional since most types of income tax are applied to entire households, not individuals. The council therefore ruled that the proposed tax rate “failed to recognise equality before public burden".
Had it been approved by the constitution the tax, a flagship promise of Hollande’s election campaign, would have only applied to estimated 1,500 citizens.
The council also disapproves of proposed methods to calculate wealth tax. It recently rejected new measures which planned to raise the number of taxable revenues and capital gains.
Meanwhile, in a statement the French Prime Minister Jean-Marc Ayrault said the government does intend to push forward with the tax rate which was part of the 2013 budget given the green light by parliament.