Cap on executive pay dropped - France

Paris - The French government has decided to drop a plan to impose a ceiling on executive pay in the private sector, though it will go ahead with a two-year super-tax on firms paying million-euro salaries, says Finance Minister Pierre Moscovici.

Moscovici told the daily Les Echos in an interview that the year-old Socialist government wanted to support business and job creation and was working to accelerate the take-up of tax credits aimed at lowering companies' labour costs.

"After several months of dialogue, I have decided to focus our legislative action on the 75% tax on salaries above €1m, which will be paid by the employer, Moscovici said, asked if a proposed law to cap pay was still in the works.

"We will not go beyond that: there will be no specific law on the governance of companies."

Moscovici said that instead the government was holding discussions with the business sector on the idea of letting shareholders have a say in a director's pay.

"Our aim is to avoid rooting the rules in law," he said.

"We prefer to go with 'a demanding auto-regulation', but careful, if the decisions announced are not up to scratch we still have the possibility of legislating."

President Francois Hollande's government is battling to overturn an image of being anti-business after corporate heads lashed out at its 75% super-tax plan and fought back at a plan last year to raise capital gains taxes.

The government has since rejigged its super-tax plan so that it applies to companies rather than employees over 2014 and 2015.

It has also altered the new capital gains tax rules so that entrepreneurs will not be punished for selling companies they have founded.

Moscovici said more needed to be done however, as France strives to return its economy to growth and halt soaring unemployment, which has risen to 10.6%.