France - taxing problems - FT.com Forget the champagne. Bring on the beer. Paris has buzzed all week with news that Bernard Arnault, France's richest man and head of luxury goods maker LVMH, is applying for Belgian citizenship. Since this coincides with a pledge by new socialist president François Hollande to impose a 75 per cent tax rate on earnings of €1m-plus, debate has erupted over the efficacy of levying large sums on the very wealthy. Not that Belgium is an obvious place to avoid high income tax rates: add in social security payments and many Belgians hand over half their earnings in tax. But the country's capital gains tax regime is very benign, so quite a lot of French money has traditionally been parked there. There is also speculation that Mr Arnault's move could be a stepping stone towards Monaco. He, though, has denied that tax planning drives his citizenship request, responding that he is, and will remain, fiscally domiciled in France. But whatever the merits of the Arnault furore, it does highlight one increasingly sure thing: the fragility of French budgetary plans as growth forecasts fall. Last July's budget aimed to peg France's 2012 fiscal deficit at 4.5 per cent of gross domestic product by raising another €7.2bn in new taxes (with wealth taxes accounting for a third of this). Come 2013, an extra €33bn was deemed necessary to achieve a 3 per cent deficit. But those sums assumed growth of 0.3 per cent this year and 1.2 per cent next. Now Mr Hollande admits that growth will be near zero in 2012 and 0.8 per cent in 2013. Plugging the gaps will not be easy. If, as hinted, the upcoming budget includes €10bn of spending cuts and €20bn of household and corporate tax increases, it will still be tough to meet deficit targets, especially if growth flags further. A VAT hike could solve a lot. Sadly, though, it would then be the bourgeoisie and sans-culottes who pay.