French lawmakers adopt revised 2012 budget

French lawmakers approved a new 2012 budget in the early hours of Friday, following four days of debate, with tax and spend initiatives scrapping key planks of ex-president Nicolas Sarkozy's policies. The measures were part of the first budget bill presented by Socialist President Francois Hollande's government since he unseated right-wing Nicolas Sarkozy in May with pledges to focus on growth instead of austerity. The French cabinet earlier this month approved the revised 2012 budget, which includes 7.2 billion euros ($8.8 billion) in tax rises and 1.5 billion euros in spending cuts this year. With a strong majority in the lower house, the Socialists and their parliamentary allies were able to easily push through the measures, via a hand vote, despite some fierce opposition from right-wing and centrist deputies. One of the measures ends a Sarkozy policy dubbed the "work more, earn more" rule of exempting overtime hours from payroll charges and income tax. Lawmakers also voted to back an emergency rise in the ISF wealth tax applying to taxpayers with a net worth of more than 1.3 million euros ($1.6 million) and which is expected to bring in an extra 2.3 billion euros in revenues this year. The rules on inheritance tax will also be tightened, to reduce the exemption ceiling from 159,000 euros per child to 100,000 euros, the creation of a three percent surtax on cash dividends and the doubling of a tax rate on financial transactions to 0.2 percent. The French lawmakers also voted to reduce the salaries of President Hollande, Prime Minister Jean-Marc Ayrault and other government ministers by 30 percent. During the debates Budget Minister Jerome Cahuzac defended the measures as "a tough effort asked of those who can" afford it. The right accused the Socialists of "lying" during the campaign and of hitting the middle-class with unexpected tax hikes. "The rich will pay a little bit more but those who will make the biggest efforts will be the small and medium" income taxpayers, former labour minister Xavier Bertrand told France Inter radio. Just before the final vote was taken at 5:30 am (0330 GMT) Cahuzac took aim at right-wing UMP deputies he accused of using filibusting measures to hamper the moves being passed. The approved measures are estimated to cut the budget deficit to 81.1 billion euros. The upper house Senate must next examine the budget which is expected to be adopted by the end of the month.