World Bulletin / News Desk
France's Socialist-dominated parliament voted on Thursday to end tax breaks on overtime work and raise wealth tax, abolishing two cornerstones of the economic policy conservative former president Nicolas Sarkozy pursued over the past five years.
The measures were in a budget bill that France's first left-wing government in a decade presented to the National Assembly after taking power following Francois Hollande's presidential election victory in May.
In one vote, the lower house of parliament endorsed plans to scrap the tax-free status of overtime hours from August onwards, unstitching tax breaks that symbolised the "work more, earn more" slogan which swept Sarkozy to power in 2007.
The vote, first scheduled for Wednesday, was delayed until a few hours before dawn on Thursday by bickering between Socialist supporters and centre-right opponents who say the measure will damage people's spending power.
Laurent Wauquiez, a centre-right politician who was a member of Sarkozy's government, denounced what he called a "rip-off" by Hollande's Socialists, saying the tax changes would knock 5-7 percent off the incomes of more than 9.5 million people in France, where the working population is roughly 25 million.
Hitting back, government spokeswoman Najat Vallaud-Belkacem said the tax breaks Sarkozy put in place had encouraged firms to pay overtime instead of hiring, costing the economy anything between 40,000 and 80,000 jobs and costing the state a total of 25 billion euros ($30.6 billion).
"It cost 5 billion euros a year without doing much for economic activity and growth," she told France Info radio.
Hollande won power on pledges to reboot the economy and get rid of a large deficit without subjecting voters to Greek-style austerity, primarily by proposing a tax-and-spend programme that he says will hit the rich harder.
The second measure approved in a National Assembly vote was an emergency increase in wealth tax designed to generate an extra 2.3 billion euros for the cash-strapped government pending fuller legislation next year to repeal tax reductions that Sarkozy introduced in 2011.
The overtime and wealth tax measures are key elements of a bill that revises the 2012 budget as Hollande and his government seek to deliver on European promises to cut France's public deficit to 4.5 percent of GDP this year from 5.2 percent last year, and to 3 percent of GDP in 2013.
Among other changes lawmakers backed were a 3 percent tax at source on cash dividend payouts by companies, in line with a goal of encouraging re-investment of profits, and a hefty reduction in value of inheritances that benefit from automatic tax exemption, to 100,000 euros from 159,000.
France reduced the legal working week from 39 to 35 hours just over a decade ago when a Socialist government was last in power, arguing that the move would encourage hiring. Without scrapping it, Sarkozy eased the strictures of the law by easing welfare levies and income tax on overtime hours.
High labour costs are back in the headlines following the announcement of 8,000 layoffs by carmaker PSA Peugeot Citroen, which has kept a far larger portion of its production in France while rivals such as Renault shifted much of it to eastern Europe.
Vallaud-Belkacem defended the abolition of Sarkozy's tax breaks, saying the costly measure for the state had mostly helped people who already had jobs but increased the number of jobless people, which is at its highest level since 1999.
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.