François Hollande on Monday vowed to press on with his super-tax on the rich, despite a damning decision by France's top court to throw it out as unconstitutional. But it is uncertain when a new version of the tax will be introduced and whether it will be watered down.
In his televised new year's address, the French president deliberately did not mention the figure of a 75% tax on incomes over €1m (£800,000), leaving the way open for his deeply symbolic measure to be changed.
"We will still ask more of those who have the most," said Hollande. He added that the exceptional tax on France's wealthy would be "adjusted without changing its objective" but did not provide details of any new proposal.
The president, who is at record unpopularity levels in the polls as he faces a grim year of further economic gloom in France, suffered a major personal blow over the weekend when France's highest court threw out his tax proposal.
The temporary tax, which Hollande had described as an act of "morality" and "patriotism" by the wealthy, now faces a delay of at least a year, if not a mortal blow.
The measure was rejected as unconstitutional on the basis of a technical issue, leaving France surprised that the government could have overlooked the fine detail of its flagship measure. The embarrassed government was attacked for amateurism by political opponents to the right and left of Hollande.
France's constitutional council ruled that the 75% tax was unfair because it flouted the law in France that taxes are set per household, not per individual. For example, if one member of a couple earned €1.2m and the partner earned nothing, they would face 75% tax on €200,000. But a couple who earned €900,000 each, €1.8m between them, would not be subject to the super-tax.
It is not clear whether the tax could now be made to apply to households that jointly earn over €1m, which would increase the number it affects from around 2,000 people to some 15,000.
Or the income threshold could be raised to €2m, so the tax affected far fewer households.
The government's lack of haste to force through a revised measure has underlined how the 75% tax, which would have brought in only €200m out of €20bn of new taxes next year, was more symbolic than effective in bringing in revenue. But it had become a crucial political marker for Hollande in terms of his support on the left. Dropping the measure altogether would be seen as very damaging to his political credibility.
The tax remains overwhelmingly popular with the French public, 60% of whom approve of it. But the row over tax exile is raging after the actor Gérard Depardieu said he was moving abroad because taxes were too high.
Hollande also used his new year's address, a setpiece in French politics, to reiterate what he has called his "great battle for employment".
He has promised to stem France's constant rise in joblessness and ensure the numbers start to drop by the end of 2013."All our efforts will be aimed at a single objective: reversing the unemployment trend within a year, whatever the cost,"he said.
This task now looks extremely difficult after France saw its 19th month of rising unemployment. The new year could soon see France breaking its own 1997 record of 3.2m unemployed.
Hollande said he did not underestimate the "serious difficulties" facing the government, admitting "this march forward has not been without bumps or setbacks" but insisting his reforms would get France "out of this crisis faster and stronger".
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image: © A. Bouirabdane