- Associated Press - Sunday, July 29, 2012

PARIS — An amended budget for 2012 being pushed through the French parliament could provide an insight into President Francois Hollande’s new Socialist administration: The rich and large companies will be taxed before spending cuts are considered, and many of the big measures of the previous administration aimed at shaking up the country’s labor market look set to be swept away.

Business leaders are worried that the first major act as France’s new leader will set the tone for the rest of his time in office.

Among the measures in the revised budget, which the lower house passed Friday and the upper house is debating, are:

Scrapping tax breaks on overtime.

A one-time extra wealth tax on people with more than $980,000 in assets.

Scrapping a law that would have raised the sales tax while decreasing employer contributions to the state benefit system.

A new tax on company dividends.

A new tax on stocks of petroleum products.

New taxes on some financial institutions and an increase in the financial transaction tax.

Few spending cuts

Debate on the budget in Parliament was fierce as members of former President Nicolas Sarkozy’s conservative party fought in vain against a rollback of much of what they had accomplished over the past five years.

At one point, the session was suspended so the deputies could cool down. Both houses of parliament are expected to approve a final version this week.

The new government claims the budget measures show that it is serious about reducing the country’s deficit. It already has pledged to balance the budget by 2017.

However, it did not back up the tax increases with any significant cuts in government spending.

Companies say that the new taxes send the wrong message: that France is closed for business.

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