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.
Listed shares in BIST 100 rise 0.01 percent; US dollar/Turkish lira rate climbs over 3.90; EUR/TRY stands at 4.80
Turkey bridges Muslim world and West, according to General Council for Islamic Banks and Financial Institutions
Britain intends to seek free trade deals with its major trading partners once it leaves the EU, as planned, in March 2019.
Net profits at the group rose 33.1 percent to hit 2.36 billion euros ($2.92 billion), higher than the 2.28 billion predicted by analysts.
About 45 minutes into trading, the Dow Jones Industrial Average was at 24,867.00, up 0.4 percent.
Low-cost carrier to offer direct flights to Dalaman from Dublin and Bratislava starting June
"Preliminary national accounts results for 2017 show an increase of 7.8 percent in GDP... compared with 2016," Jennifer Banim, an assistant director general at the Central Statistics Office (CSO), said in a statement.
Unemployment rate falls 2.3 percentage points year-on-year in December to 10.4 pct
"It is time to forget about ideological trench warfare," Francois Villeroy de Galhau told a Frankfurt conference.
In January, euro area and EU28's industrial production drops in January compared to previous month, Eurostat says
In a statement, Siemens said it had signed an accord with APEX, Brazil's Trade and Investment Promotion Agency, committing to a string of projects to "unleash a new cycle of sustainable growth" in the country of 207 million people.
The US supply increase is expected to come as the Organization for Petroleum Exporting Countries, dominated by oil giant Saudi Arabia, works with Russia to slash output after prices for crude plummeted to around $30 per barrel in 2016 from over $100 two years earlier.
Emerging trends, challenges and business opportunities in Islamic finance industry will be discussed during 2-day event
BIST 100 rises 0.05 percent, US dollar/Turkish lira exchange rate stays put, euro/lira exchange rate goes up
Turkey and Sudan can build joint industrial zones, says Turkish technology minister