France increases its taxes to avoid debt

FRENCH President Nicolas Sarkozy’s government has announced tax increases on the highest earners, capital gains, alcohol, tobacco, and sugared drinks to meet deficit targets and avoid the worst of the euro debt crisis.

Prime Minister Francois Fillon announced €12 billion of measures in 2011 and 2012 and cut economic growth forecasts, saying the euro region’s second-largest economy will expand by 1.75% in each year. He said France’s deficit would be 4.5% of gross domestic product in 2012, when Sarkozy seeks re-election, beating the target.

“We have passed the threshold of tolerance on debt,” Fillon told reporters at a briefing in Paris. Yet, “today’s policies are not emergency austerity measures.”