France's Wealthy Fear Royal Will Raise Taxes

PARIS — Business leaders in France are warning of an exodus of the country's top-flight taxpayers to London and other foreign capitals if Segolene Royal is elected president in May.

French industry fears that the Socialist Party candidate plans to raise taxes for high earners and big companies, after she shocked them with hard-left comments last week.

There are concerns that a significant body of industry captains will leave France as they did when the socialist Francois Mitterrand became president in 1981.

"It's a cold shower. We were hoping for a French Tony Blair, and we see that the Socialist Party cannot free itself from the ideological shackles of the far-left," said Geoffroy Roux de Bezieux, president of Croissance Plus, a federation of high-growth entrepreneurs.

Alarm bells in the business community were further sounded this week when the senate finance committee released a report showing that the number of those fleeing France's punitive wealth tax doubled between 2003 and 2005. The country is now losing two top taxpayers a day, a loss of $2.88 billion in 2005 alone.

The right has sought to stem the flow by introducing a 60% tax ceiling in January. Yesterday, Thierry Breton, the finance minister, said French entrepreneurs had "every reason to stay" in France as they would now be protected from "excessive taxation."

But businesses are concerned that Ms. Royal would scrap the ceiling — one of a series of measures proposed in a report written for her last week.

The report also proposed a "citizen's contribution" on the French assets of tax exiles, dubbed the "Johnny tax."

This is a reference to the French rock star Johnny Hallyday, 63, who late last year announced that he was moving to a Swiss ski resort because he was tired of being "fleeced" by the French taxman.

Ms. Royal shocked business leaders last week by declaring: "I found myself faced with the enemy I have had all my life, which is money. I am not talking about salaries, but lazy profits. Not hard-earned pay, but rapacious money."

The business community has reacted angrily to her proposals to regulate bank fees and impose a tax on the "super-profits" of French oil giant Total, which announced record gains on Wednesday.

While she has proposed giving tax breaks to companies that create jobs, she also plans to introduce a tax on international financial transactions.

Meanwhile, her bid to catch up with Nicolas Sarkozy, the right-wing presidential front-runner, suffered a fresh blow yesterday after the Socialist Party's chief economist, Eric Besson, stepped down due to a "disagreement" with Francois Hollande — the party chief and Ms. Royal's common-law husband.

He denied that the dispute was over how much the socialist program would cost the taxpayer. Mr. Hollande put the figure at $46 billion, but some independent estimates suggest it will cost at least $72 billion.