Newly sworn into office in May, French President Francois Hollande, is already incurring the wrath of the people with his first budget disclosure. The socialist-leaning Hollande has put on the proverbial boxing gloves with the ever-stern Angela Merkel, and declared a tax-the-rich set of principles, but all that is just rhetoric until the axe drops and the plans are actually implemented. CNN writer, Agnes C. Poirier, covered the new budget disclosure and it’s safe to say that Hollande-style austerity might be a tough sell to the French: “Apart from three key ministries, education, interior and justice, which have been spared, the French state is cutting its spending by 10 billion euros in 2013…the other 20 billion euro savings in his budget will come from the wealthiest taxpayers with a string of new taxes.”
This stab at the elite is a wild swing away from his predecessor and one that Sarkozy’s crew estimate might backfire as the concern is that France’s wealthy will then decamp to neighboring Switzerland or Belgium, taking their money with them. Hollande’s plan for the business sector is also rankling many, with small businesses spared from higher taxes while the big fish are being asked to pay more. As for CNN’s forecast that Hollande’s proposals will spark a “financial war” it’s too early to tell at this point. But it’s interesting to think that the 45% tax proposed for those making over 150,000 euros a year is estimated to raise 320 million euros, whilst his highly contentious 75% tax for those earning over a million euros will “only reap 210 million.” Sparing the three major ministries, as noted above, shows foresight and the desire to raise money elsewhere, but as is the case with Spain and Portugal, tightening the belt can’t be the only weapon used to get France out of the economic mire – there must also be growth.