France's socialist president Francois Hollande suffered a setback as the country's highest court ruled his plans for a 75pc tax on its highest earners were unconstitutional.
France's highest court on Saturday blocked a move by Francois Hollande's socialist government to impose a 75pc tax rate on people earning over €1m (£820,000), calling it unfair.
The constitutional court said the controversial wealth tax was designed in a way that was unconstitutional, as it could leave two households with the same income paying different rates depending on how earnings were split among their members.
However the setback to Mr Hollande's flagship policy is unlikely to draw an end to the row over the government’s attitudes to wealth, as ministers pledged to redraft and resubmit the proposal.
French prime minister Jean-Marc Ayrault said that the government “takes note” of the court's decision and “will present a new proposal in line with the principles laid down by the constitutional court.”
The planned tax rate is seen as largely symbolic. It is expected to bring in around €300m a year, which will not amount to much in the effort to reduce France's budget deficit.
None the less, it has become the focus of concern among France's wealthy and its entrepreneurs, some of whom have left the country.
In recent weeks, Russian president Vladimir Putin offered a passport to France’s most famous actor Gerard Depardieu, who has accused his own country of punishing success and has threatened to depart over the tax plans .
Separately, Alain Afflelou, the French optician chain tycoon, said earlier this month he was moving to London , although he denied it was linked to the tax issue. Meanwhile Bernard Arnault, France’s richest man, is waiting to hear the outcome of his application for Belgian nationality.