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France to Re-Introduce Millionaires Tax in 2014, Belkacem Says

French President Francois Hollande
French President Francois Hollande, right, accompanies French Prime Minister, Jean-Marc Ayrault, center, after the first cabinet meeting of the year at the Elysee Palace in Paris on Thursday. Photographer: Eric Feferberg/AFP/Getty Images

Jan. 3 (Bloomberg) -- French President Francois Hollande’s government plans to re-introduce a millionaires’ tax of 75 percent next year, addressing objections by the constitutional court that struck down the levy last week.

Hollande told a cabinet meeting today that he wants the tax in next year’s budget, though the exact adjustments and how many years it will last haven’t been decided, government spokeswoman Najat Vallaud-Belkacem said in a press conference.

The surcharge on incomes over 1 million euros ($1.3 million), one of Hollande’s campaign promises, was rejected by the country’s top judges on Dec. 29 because it applied to individuals and not households. As a result, two households with the same total income could end up paying different rates, contravening equal-tax treatment, the Paris-based court said.

“The tax remains a part of the government’s aim of reviving France with justice,” Vallaud-Belkacem said.

The millionaires’ tax has become a focal point of discontent among entrepreneurs and well-paid French citizens, some of whom have quit French shores as a result. Actor Gerard Depardieu, France’s highest-profile tax exile, has been engaged in a war of words with the government over his decision to move to a Belgian town just across the border. Billionaire Bernard Arnault, chief executive officer of LVMH Moet Hennessy Louis Vuitton SA, filed an application for Belgian nationality in September.

Russian President Vladimir Putin signed an order today granting Depardieu Russian citizenship, according to a statement posted on the Kremlin website. A spokeswoman for the actor declined to comment as did Vallaud-Belkacem.

The Dec. 29 ruling also lowered maximum tax rates on stock options, a form of retirement benefit, and bearer bonds. Overall, it cut about 500 million euros from the government’s expected receipts in 2013, Vallaud-Belkacem said, rejecting reports in some French newspapers that lost revenue could be as much as 1 billion euros.

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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