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Dead and buried, France quietly scraps controversial wealth tax

media French President Francois Hollande (L) and Prime Minister Manuel Valls walk together after the weekly cabinet meeting at the Elysee Palace in Paris December 22, 2014 REUTERS/Gonzalo Fuentes

The Socialist government on Saturday moved to scrap an unpopular 75% tax on the country's wealthiest, after a wad of criticism for being anti-business.

 

 

From February next month, businesses in France will no longer have to pay hefy contributions to the government as part of a 75% supertax. The controversial policy-one of President Hollande's 2012 campaign promises- is in its last throes.

The measure, which imposed a 75% rate on earnings above €1m, was meant to force the wealthiest to help dig the country out of economic crisis. But instead of big returns, it  brought big controversy.

When it was announced in September 2012, the Socialist government was accused of shooting itself in the foot by risking an exodus of high-profile personalities.

High-earning French footballers threatened strike action, while league bosses warned they would no longer be able to attract world class players.

Business leaders meanwhile expressed fears that the “supertax” would send investors running.

And that's what they did. France’s richest man, Bernard Arnault, the chief executive of luxury group LVMH, took out Belgian nationality, and the actor Gérard Depardieu also moved across the border to Belgium before obtaining Russian citizenship. 7 billion euro of assets are believed to have gone to Belgium alone.

The death of the "supertax" comes as no surprise. Prime minister Manuel Valls announced during a recent trip to London, that the measure would not be extended in 2015.

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