France’s Hollande set to unveil unprecedented austerity plan

PARIS, France – French Socialist President Francois Hollande was due to announce Sunday, September 9, unprecedented belt-tightening measures of billions of euros amid mounting discontent over the flagging economy and job cuts.

Hollande, whose popularity ratings have taken a dive less than 4 months after he took power, is looking vulnerable as he prepares to push through a deficit-cutting budget and face down union anger over mounting layoffs.

The Journal du Dimanche warned that Hollande — who famously said he does not “like the rich” and has proposed a stinging 75% tax on income exceeding one million euros, would announce “unprecedented” austerity plan.

It said the president would outline in an interview on TF1 television new taxes of between 15 and 20 billion euros ($19 and 25 billion) as well as austerity measures that would save 10 billion euros.

The interview, due to start at 1800 GMT, comes on the heels of the shock announcement by France’s richest man Bernard Arnault, the boss of luxury goods giant LVMH, that he is seeking Belgian citizenship.

The move prompted Francois Fillion, the prime minister of former right-wing president Nicolas Sarkozy, to denounce “stupid decisions” which lead to “terrible results”.

But Arnault, the world’s 4th richest person, denied Sunday, September 9, that he was seeking to become a tax exile.

“I am and will remain a tax resident in France and in this regard I will like all French people fulfill my fiscal obligations,” he told AFP.

“Our country must count on everyone to do their bit to face a deep economic crisis amid strict budgetary constraints,” he said, adding that his bid for dual nationality was “linked to personal reasons” and began some months ago.

Arnault had emigrated to the United States in 1981 during the last Socialist presidency.

Hollande’s ratings have dropped remarkably since his May election.

An Ifop poll published in the Journal du Dimanche showed only 48% thought Hollande would fulfil his campaign pledges of which the 75% tax on the rich was a key plank.

Another survey conducted by BVA for Le Parisien newspaer revealed that nearly 60% were dissatisfied with his performance uptil now.

In an another poll by OpinionWay for the freesheet Metro due to appear on Monday, only 46% pronounced themselves happy with Hollande.

The president acknowledged on Saturday that it was a “difficult period marked by rising prices, welfare projects and high unemployment” and that the government’s response had not yet fulfilled public aspirations.

Finance minister Pierre Moscovici has insisted that the 75% wealth tax would not be watered down.

“Any other interpretation is unfounded,” he said on Friday, September 7. “Technical modalities are in the process of being worked out. This commitment by the president of the republic, will be strictly respected” in the 2013 budget.

French dailies Les Echos and Le Figaro recently reported that the government was looking to dilute the campaign pledge by raising the 75% tax rate threshold to two million euros for couples and excluding capital gains.

Hit by the eurozone debt crisis, France’s economy just avoided entering a recession in the second quarter. Unemployment continues to rise, with the number of jobseekers seeing its sharpest monthly increase in 3 years in July, hitting 2.99 million people.

But experts said the government had to take some of the blame for the falling poll numbers.

The drop in popularity is bound to make things difficult for Hollande as he prepares a 2013 budget that must save more than 30 billion euros to meet EU deficit reduction rules.

The end of France’s traditional August holiday will also see the start of a fraught season of job cuts at major companies including carmaker PSA Peugeot Citroen, whose announcement last month it was slashing 8,000 jobs shocked the country.

Unions have warned they will not take the cuts lying down and France could be set for a return to labor unrest. – Agence France-Presse