What May Change with the New French President, Francois Hollande?
As you may already know, France has just learned about a change of political direction with the election of the left-wing candidate, Francois Hollande, as Republic President. The new leader has planned numerous reforms in the state for the next 5 years, with the purpose to re-boost growth by setting a tax-and-spend program.
To carry out these reforms, Francois Hollande plans to make savings by taxing the wealthiest part of the population while changing some administration aspects. Indeed, just following its creation, the new government has decided to reduce the presidents and minister’s salaries by 30%. Moreover, savings will be led by staff-cut reforms in some cabinets, especially the Defence cabinet. The president also plans to increase the income tax of the wealthiest people, to arrive at a 45% tax on incomes higher than €150,000 per year and 75% for incomes higher than 1 million Euros. Regarding inheritance tax, the exempted value limit would drop from €159,000 to €100,000. According to his program, the wealth taxes cut by Nicolas Sarkozy will be restored and the returns on capital, essentially received by the well-off households, will be taxed as well like the earned income. For companies, there would be 3 levels of tax rates according to their size. Francois Hollande also intends to restore the taxation on the working overtime removed by his predecessor, to boost the employment while increasing the State income simultaneously. Furthermore, the Scellier Law, which allowed some cuts on taxable incomes to buyers who acquire a new property (or under construction) by the end of 2012, will not be renewed.
The incomes created with these measures, besides the saving accounts, would be used to re-boost the country’s economy. To counter unemployment, the new President wants to facilitate the integration of youth into the workplace, as well as, reducing the oldest working people’s unemployment. For this, he plans to establish “generation contracts,” the employment of a young person during the last working years of a senior employee would lead to an exemption of the employer’s social security contributions during this period.
The education, which is considered to have deteriorated over the past few years, is one of the Mr. Hollande’s top priorities. The main issue is the decreasing number of teachers and the suppression of their initial training by Nicolas Sakozy. The new president plans to create 60,000 employment positions including teachers especially teachers, but also psychologists and security staff. Amongst these new positions created, Mr. Hollande will enforce the initial training to ensure proper restoration.
Regarding housing, President Hollande wants to boost the construction of accommodations, increase the rate of council houses, and control the rents to avoid abuses. Healthcare and retirement are also important matters in Mr Hollande’s enhancement programme.
To be applicable, these reforms have to be voted on by the government; that includes not only the president and the ministers, but also the Parliament which is composed of members who are going to be elected in June by the French. According to the majority in the Parliament will be will greatly affect the outcome of these reforms being either approved or rejected. Now, let’s wait and see! After all, according to world institutions such as IMF, France remains one of the safest nations to own real estate property in. On the contrary, the drop of the euro value and the French mortgage rate represents a real opportunity for foreigners to purchase a property.