France budget: Taxes favoured over spending cuts

Jean-Marc Ayrault: "The effort we are asking people to make is necessary and fair"Continue reading the main story
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France has unveiled its budget for 2013, avoiding big austerity spending cuts in favour of higher taxes on the wealthy and big businesses.

French Prime Minister Jean-Marc Ayrault confirmed that there is to be a new 75% tax rate for people earning more than 1m euros (£800,000; $1.3m) a year.

But he insisted that nine out of 10 citizens will not see their income taxes rise in the new budget.

The government plans to raise 20bn euros in extra revenue.

That compares to 10bn euros in spending cuts.

The emphasis on tax rises is a policy of the new French President Francois Hollande that is against the prevailing mood of Europe where countries from Ireland to Greece are slashing spending to try to placate investors and lower borrowing costs.