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02:27 GMT +3 hours23 December 2014
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France Unveils Austerity Budget

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The French government will implement austerity measures to cut the national budget deficit, aiming to slash it to 3 percent of GDP, Prime Minister Jean-Marc Ayrault said on Friday.

The French government will implement austerity measures to cut the national budget deficit, aiming to slash it to 3 percent of GDP, Prime Minister Jean-Marc Ayrault said on Friday.

These wideranging cuts are unprecedented in the country's recent history. Earlier in the day, the head of government presented a 2013 draft national budget to a Council of Ministers session.

“The 2013 budget is a battlefield budget that will enable us to fight for economic growth and fight against the state debt, which continues to grow,” Ayrault said.

The draft budget allocates 24.4 billion euros in tax revenues to plugging the deficit. Another 10 billion is to be generated by government spending cuts and 2.5 billion from medical insurance spending cuts.

The most eye-catching element of the draft budget is the introduction of a new 75 percent tax rate for the country's highest earners.

This will apply solely to "earned income," not investment capital.

The government also wants to bring back a small wealth tax on holdings of over 1.31 million euros, reduce the amount of tax deductions people can claim, and cut the tax burden on some low income families.