French President François Hollande said he will lower capital gains taxes to clear up what he called a “misunderstanding” after he raised levies last year, reports Bloomberg.
Levies on capital gains, now mainly taxed as ordinary income, will be reduced by 50 percent for assets held for more than two years and by 65 percent after eight years. A more favorable regime is planned for venture capitalists and business owners who sell to shift into retirement, at a total cost of between 200 million euros ($262 million) and 300 million euros a year, Hollande’s office said.
“I want to address the misunderstandings of last autumn,” Hollande told entrepreneurs gathered at the Elysée Palace. “Our tax regime should discourage speculation and compensate investment and risk taking.”
Today’s plan follows up on a capital-gains exemption given to entrepreneurs last October when a protest movement among small-business owners using the pigeon as its symbol gathered more than 34,000 signatures. The reversal came as Hollande was struggling to reduce France’s budget deficit and revive an economy that has been stalled for about two years.
Hollande is making the renewed push to support business at a time when French jobless claims have jumped to an all-time record of 3.22 million and the Socialist president’s own popularity has slumped.
In a nod to concerns about excessive European austerity being expressed by members of his own party, Hollande said he understood the deficit-cutting effort has slowed growth in France in the wake of the euro zone debt crisis, though he also said that France itself needs to address its economic problems.
Read more of this report from Bloomberg.