France introduces new tax on high incomes

Liliane Bettencourt was among those offering up some of her wealth

The French government is to impose an extra tax of 3% on annual income above 500,000 euros (£440,000; $721,000).

It is part of a package of measures to try to cut the country's deficit by 12bn euros over two years.

The tax increase came after some of France's wealthiest people had called on the government to tackle its deficit by raising taxes on the rich.

Paris has also reduced its economic growth forecast for 2012 to 1.75% from a previous 2.25%.

'Rigorous'

And it has cut its 2011 growth forecast from 2% to 1.75%, Prime Minister Francois Fillon has said.

He said the new tax would remain in place until France reduces its budget deficit back under the EU's intended limit of 3% of GDP, which should occur in 2013.

France plans to trim its public deficit to 5.7 % this year, 4.6 % next year and 3% in 2013.

"This is a rigorous policy that will allow France to remain relaxed," Mr Fillon said. "Our country must stick to its [deficit] commitments. It's in the interest of all French people."

Sixteen executives, including Europe's richest woman, the L'Oreal heiress Liliane Bettencourt, had offered in an open letter to pay a "special contribution" in a spirit of "solidarity".

It appeared on the website of the French magazine Le Nouvel Observateur.

It was signed by some of France's most high-profile chief executives, including Christophe de Margerie of oil firm Total, Frederic Oudea of bank Societe Generale, and Air France's Jean-Cyril Spinetta.

They said: "We, the presidents and leaders of industry, businessmen and women, bankers and wealthy citizens would like the richest people to have to pay a 'special contribution'."

They said they had benefited from the French system and that: "When the public finances deficit and the prospects of a worsening state debt threaten the future of France and Europe and when the government is asking everybody for solidarity, it seems necessary for us to contribute."

They warned, however, that the contribution should not be so severe that it would provoke an exodus of the rich or increased tax avoidance.