France and Britain fall out over Cameron tax ‘jest’

President Francois Hollande

France’s President Francois Hollande suffered a sense of humor failure at the G20 summit in Mexico on Tuesday after a cheeky British attack on his tax policies turned into a political row back home.

Prime Minister David Cameron triggered the spat on Monday, when he boasted that Britain was preparing to welcome an exodus of French high-earners fleeing Hollande’s plan to impose a 75 percent tax rate on top salaries.Downing Street said that the offhand comment, delivered to business leaders at an address before the start of the G20 talks in the Mexican resort of Los Cabos was meant “partly in jest,” but the remarks caused a storm in France.

Britain and France have a long history of sparring at international events, and Cameron also had some famously testy encounters with Hollande’s right-wing predecessor Nicolas Sarkozy over eurozone financial policy.The French Socialist’s cool reaction suggested the sniping would continue.”Everyone should take responsibility for what he says. I do. At a time when European solidarity should be strong, I will do nothing to breach it,” he sniffed starchily when quizzed by French reporters on the comments.

The French leader, who is attending his first gathering of the world’s most powerful economies, was reacting after Cameron said Britain expected to reap the benefits of Hollande’s tax strategy.”When France sets a 75 percent top income tax rate we will roll out the red carpet and we will welcome more French businesses which will pay their taxes in Britain. That will pay for our public services and our schools,” he said.Hollande was elected last month on a platform that included a pledge to slap a 75 percent tax on any annual income beyond one million euros ($1.26 million), despite warnings from the French right that this would drive away high-earners.

Britain is already home to many wealthy French citizens working in London’s huge international financial sector, and Cameron’s Conservative-led coalition government lowered taxes on top earners in this year’s budget.”The PM was answering a question partly in jest, but there’s also a serious point to what he said in terms of competitive tax policy. We’re very keen for business to come here,” a Downing Street spokesman said in London.Cameron’s comments may have been meant light-heartedly, at least in part, but they provoked a strong reaction in France, where leaders are already exasperated at Britain’s stance on the eurozone debt crisis.

The row led news bulletins in France, overshadowing Hollande’s broader G20 summit agenda of seeking support for a European economic growth pact.France’s European Affairs Minister Bernard Cazeneuve dismissed the idea that French bosses might pack their bags.”What I can answer to this statement from the British prime minister is that there are French bosses who are patriots, and there is a range of measures we will take in favor of business,” he said.And former French prime minister Michel Rocard, a leading member of Hollande’s Socialist Party, branded Cameron an “unworthy provocateur who has insulted a neighboring country.”

But Laurence Parisot, the head of the employers’ association MEDEF, warned that there might be at least some truth in Cameron’s claim, calling for more to be done to keep free enterprise in France.”If I tell you what I’m telling you this morning, it’s because I don’t want French businesses to walk along that red carpet,” she said.”I also want a French spirit of enterprise so that there’s no question of the entrepreneurial spirit becoming a British monopoly.”Britain refused to join the single currency but has not been shy about hectoring Europe from the sidelines, with Cameron pushing euro members at the G20 to adopt common economic government to protect the currency. – Yahoonews