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French legal panel rejects tax hike for wealthy

France's Constitutional Council has rejected plan to tax the ultrawealthy at a 75 percent tax rate that was to be introduced by Francois Hollande's Socialist government. The council said the rate was excessive.

The French constitutional panel overturned Hollande's contentious plan to tax those with incomes above 1 million euros ($1.32 million) on Saturday, following fierce resistance from opposition conservatives.

In a statement the council said the rate was unfair in the way it would affect different households. It is tasked with ruling on whether laws are constitutional.

The decision comes as a blow to the Socialist president who had made the hike his flagship tax measure in a bid to reduce France budget deficit. It had been approved by France's government in its most recent budget and was expected to raise around 300 million euros a year.

Although it would only have affected a few thousand people, critics warned it would drive away the country's wealthiest citizens. French actor Gerard Depardieu hit the headlines in recent weeks after announcing his move to Belgium in avoid his home country's high taxes.

ccp/rc (Reuters, AP)