Sarkozy unveils new capital gains tax to fund welfare
French President Nicolas Sarkozy announced a new tax of 1.1 percent on capital gains to fund unemployment payments for the poor.29 August 2008
CHANGE -- French President Nicolas Sarkozy announced Thursday a new tax on capital gains to fund unemployment payments for the poor.
He announced a tax of 1.1 percent on capital revenues to come into force in January 2009 to fund the so-called RSA welfare payments.
"I will finance this new RSA by creating an extra tax of 1.1 percent... on revenues from inheritance and investments," said Sarkozy in the town of Change in northwest France.
"It is not deficits that will finance reform," he said. "I judge it normal that, in an effort of solidarity, each person contributes to getting three million of our compatriots out of poverty."
The tax will bring capital gains tax to a total of 12.1 percent, the presidency said ahead of Sarkozy's announcement.
It will be used to fund his plan to introduce the RSA, the French initials for Active Solidarity Revenue, aimed at ending the situation where it can be unprofitable for unemployed people to return to work.
The surprise move received mixed reactions and was cautiously welcomed by Francois Hollande, head of the Socialist opposition.
Alain Lambert, a member of Sarkozy's right-wing UMP party who serves on the Senate finance commission, criticised the move to increase taxes, which has also drawn fire from insurance companies and savings groups.
[AFP / Expatica]