Hollande unveils 7bn-euro tax rise for rich and firms

French President Francois Hollande President Hollande has been forced to raise taxes because of slower than expected economic growth

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French President Francois Hollande has announced plans to raise taxes on businesses and the richest households by 7.2bn euros (£5.8bn; $9bn).

He unveiled plans for a 2.3bn-euro one-off levy on households earning 1.3m euros a year or more.

There will also be a special tax on large banks and oil companies which is forecast to raise 1.1bn euros.

Earlier this week, auditors had warned that the new Socialist government needed to raise an extra 10bn euros.

France has promised to reduce the gap between annual government spending and tax receipts to 4.5% this year from 5.2% in 2011.

But on Tuesday, the government was forced to reduce its forecast for economic growth.

It now expects GDP to expand by 0.3% this year and 1.2% in 2013, compared with earlier estimates of 0.5% and 1.7% respectively.

The consequent fall in tax receipts and rise in benefit claims risks pushing up debt, so the taxes announced by Mr Hollande are aimed at putting the government back on track towards reducing its deficit to 3% of GDP in 2013.

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