French 'millionaire's tax' gets go-ahead from Constitutional Council

French Junior Minister for Budget Bernard Cazeneuve arriving at the Elysee presidential palace to attend a meeting with the French President and football club presidents focused on the millionaires' 75 percent super tax, on Oct 31, 2013. France'
French Junior Minister for Budget Bernard Cazeneuve arriving at the Elysee presidential palace to attend a meeting with the French President and football club presidents focused on the millionaires' 75 percent super tax, on Oct 31, 2013. France's Constitutional Council gave the green light on Sunday to a "millionaire's tax", to be levied on companies that pay salaries of more than 1 million euros (S$1.74 million) a year. -- PHOTO: AFP

PARIS (Reuters) - France's Constitutional Council gave the green light on Sunday to a "millionaire's tax", to be levied on companies that pay salaries of more than 1 million euros (S$1.74 million) a year.

The measure, introduced in line with a pledge by President Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike.

It was originally designed as a 75 per cent tax to be paid by high earners on the part of their incomes exceeding 1 million euros, but the council rejected this, saying 66 per cent was the legal maximum for individuals.

The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.

Under its new design, which the Council found constitutional, the tax will be an exceptional 50 per cent levy on the portion of wages exceeding 1 million euros paid in 2013 and 2014.

Including social contributions, its rate will effectively remain roughly 75 per cent. The tax will, however, be capped at 5 per cent of the company's turnover.

The Council, a court made up of judges and former French presidents, has the power to annul laws if they are deemed to violate the Constitution.