July 10 (Bloomberg) -- President Francois Hollande told French citizens in London, many of whom work in the City’s financial industry, that he won’t go back on higher taxes for the rich, saying the measure is patriotic.
“This is not a punishment,” Hollande said in a speech at the French ambassador’s residence today. “It’s not to point at those who’ve succeeded by their talent and their work to accumulate wealth. But at the moment we’re seeking everyone’s help to cut the debt, deficit and improve our competitiveness,” he said, calling it “a certain form of patriotism.”
In his first visit to London since he was elected on May 6, Hollande played down questions about U.K. Prime Minister David Cameron’s open invitation last month to French tax exiles. Cameron said he would “roll out the red carpet” for those seeking to quit France to escape a planned 75 percent levy on income of more than 1 million euros ($1.27 million) and a boost in taxes on big companies to 35 percent from 33 percent.
France’s Socialist government unveiled on July 4 a revised budget law for this year, earmarking 7.2 billion euros ($9 billion) of tax increases to meet deficit-reduction goals and avoid bond-market punishment. The largest new levy will be a one-time surcharge on wealthy individuals’ assets to raise 2.3 billion euros. The government said it may be study options for taxes on fiscal exiles.
In his comments in Mexico welcoming French tax exiles, Cameron also referred to the new levies as “completely uncompetitive top rates of tax.”
At a joint press conference today with Cameron, Hollande said, “I was not offended by what was a joke. I don’t think it’s going to have an impact on the movement of capital.”
He said the tax dimension is not the biggest difference between the two countries. “I look the U.K.’s maximum tax level. It’s 45 percent. In France, it’s only 41 percent as of today. That doesn’t entice British citizens to come and live in our country, except for holiday homes that we’re not going to tax more.”
In his turn, Cameron said people around him who have a French connection, especially “an ambassador in France who has a house in Normandy, will be particularly relieved by that last answer.”
Still, Hollande has drawn fire for focusing much of his efforts to cut deficits on raising taxes rather than capping public spending. German Finance Minister Wolfgang Schaeuble last month criticized his decision to pull back the minimum retirement age to 60 from 62 for some workers.
The French president, who yesterday opened a two-day conference in Paris with representatives of employers and unions to improve French competitiveness, acknowledged the need to “make our country more competitive, better equipped to face the challenges of globalization, but we must do it with greater fiscal justice,” Hollande said.
He held a meeting, a lunch and a press conference with Cameron at Downing Street today before meeting Queen Elizabeth II in Windsor Palace for 30 minutes.
Hollande has tried to use the trip to show a convergence on French and U.K. views on issues including Iran, Syria and military cooperation. Still, the two countries are at odds on some economic issues, including bank supervision.
The French president today said the U.K. needs to consider greater bank regulation after Barclays Plc was fined a record 290 million pounds ($451 million) last month for attempting to rig the London interbank offered rate.
“When we look at the news here in the U.K., we see there is the need to regulate to avoid scandals,” Hollande said.
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