French President Francois Hollande's initiative to impose higher taxes on the rich suffered a set back after the country's Constitutional Council on Saturday rejected the proposal, media reports said.
The French government had put up the measure to impose a tax rate as high as 75 percent on the country's rich people, making them contribute more to the ongoing effort to reduce the public debt. The proposal, which was the highlight of Hollande's election campaign, called for 75 percent tax on annual income above EUR 1 million.
The government is planning to redraft the proposal to impose high tax on the rich and resubmit it in a new budget law. The rejection of the measures will have likely cut EUR300-500 million from the forecast tax revenues next year, sources said.
The proposal had infuriated the wealthy French and earned sharp criticism from the business community, which accused the president of being anti-business.
France's general government debt remained high at 89.9 percent of gross domestic product at the end of the third quarter, broadly unchanged from 91 percent in the second quarter. The economy remained at near-stagnation levels in the third quarter, with gross domestic product edging down 0.1 percent sequentially, as it did in the preceding quarter.
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