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By Vittorio Hernandez
French Prime Minister Francois Fillion announced tax hikes to reduce the country's budget deficit by $.17.3 billion (EUR 12 billion) over the next two years.
Along with the announcement of a package of measures to reduce the budget gap, Fillion said that the country's growth forecast for this year is reduced to 1.75 percent from 2 percent.
The prime minister said that France targets to cut its budget gap to 5.7 percent of gross domestic product this year, 4.6 percent in 2012 and 3 percent in 2013, which is the limit set by the European Union.
While cutting costs, the French government will increase revenue through an extra tax of 3 percent of yearly income for citizens earning more than $721,000 (EUR 500,000) a year.
Besides higher income taxes, the government would collect higher taxes on alcohol, tobacco and soda, which are expected to raise $16 billion (EUR 11.1 billion).
To help the government, 16 French executives offered through an open letter to give a special contribution to the country's coffers as a show of their solidarity. Among them are L'Oreal heiress Liliane Bettencourt, who is Europe's richest woman, Total Chief Executive Officer Christophe de Margerie, Societe Generale chief Frederic Oudea and Air France CEO Jean-Cyril Spinetta.
France is the second largest economy in the eurozone, next to Germany.
According to the International Monetary Fund analysis of the French economy, among triple A rated countries in the continent, France has the largest total outstanding debt, equivalent to 80 percent of its GDP. If the economy's growth would continue to slow down or France misses its budget targets, the outstanding debt could rise to almost 100 percent of GDP.
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