Millionaires targeted in latest French budget

French president Francois Hollande has hit France's wealthy and big business in todays, as €20bn (£16bn) in new taxes are introduced with the country's rich to take the biggest hit.

The 2013 budget will see millionaires taxed a 75% for the next two years on income over €1m, while a 45% hike for higher rate tax payers (on more than €150,000) will also be introduced.

Business will be hit with measures including a cut in the amount of loan interest which is tax-deductible and the cutting of an existing tax break on capital gains from certain share sales - moves worth around €6bn collectively.

Hollande, who promised not to follow the stringent public spending cuts seen across the eurozone, will freeze, as opposed to reducing, government spending - saving €10bn next year.

The French government intend to narrow the nation's deficit in 2013 to 3% of output from the current 4.5% and forecasts national growth of 0.8% next year.

Official figures released today (Friday) showed French growth at 0% but prime minister Jean-Marc Ayrault said the 0.8% target was 'realistic and ambitious'.

He said: 'This is a fighting budget to get the country back on the rails.

'It is a budget which aims to bring back confidence and to break this spiral of debt that gets bigger and bigger.'

Grant Thornton's head of tax, Francesca Lagerberg commented on the budget: 'History shows that high tax rates rarely bring in as much as expected. There is a tipping point when those able to be internationally mobile move and compliance tends to decrease.'

The government also earlier announced a French social charge, which will affect approximately 200,000 non-French residents who own property in France.

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