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Tax scandal only latest headache for France's Hollande

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(Globalpost/GlobalPost)

French President Francois Hollande is facing his biggest political crisis yet after former budget minister Jerome Cahuzac was charged in a tax fraud probe for having an undeclared foreign bank account.

The crisis comes as Hollande, a socialist who defeated right-winger Nicolas Sarkozy for the presidency last May, is languishing in the polls amid a slew of political headaches.

Among his biggest challenges are:

THE ECONOMY: Hollande came to power vowing to lift the French economy back to its feet but has struggled in the face of rising unemployment, stagnant growth and a stubborn budget deficit. The government has already announced it will miss its target this year with a deficit of 3.7 percent, while the European Commission has forecast the French economy will manage only 0.1 percent growth this year. The number of unemployed has meanwhile risen to 3.187 million, a level just shy of a record reached in 1997.

LABOUR TENSIONS: France has been hit by a wave of job cuts and plant closures in the last year, raising tensions between the Socialists and their traditional allies in labour unions. The unions have raised the threat of general strikes, while business chiefs have urged the government to ease labour laws to boost France's international competitiveness. Significant job reductions have been announced at major companies including carmakers PSA and Renault and steelmaker ArcelorMittal, as well as dozens of smaller companies.

WEALTH TAX: Hollande's centrepiece tax policy, a 75 percent rate on incomes of more than one million euros ($1.3 million), has failed to get off the ground, with the country's top legal body declaring it unconstitutional. The government has promised to rework the proposal but it has faced stiff opposition from business leaders and top earners. Some, such as actor Gerard Depardieu, have decided to seek tax exile abroad.

GAY MARRIAGE: Hundreds of thousands have taken to the streets to oppose one of Hollande's key social reforms -- the extension of marriage and adoption rights to same-sex couples. The hugely controversial bill has been adopted by the lower house and is expected to soon be approved by the Senate, but its vociferous opponents are unlikely to forgive the Socialists.

CABINET WOES: Hollande's government has struggled under accusations of inexperience and gaffes, with much of the criticism focused on Prime Minister Jean-Marc Ayrault, who critics say has been unable to maintain control of his ministers. The government has had to make several reversals, including Ayrault hastily backtracking after suggesting that France's 35-hour working week was not sacrosanct.

MALI/HOSTAGES: While Hollande's intervention against Islamist rebels in Mali was popular, it did not give him a significant boost in the polls and the retaliatory kidnapping of a French family of seven in Cameroon made France the Western country with the highest number of hostages being held abroad.

mm/gk

http://www.globalpost.com/dispatch/news/afp/130403/tax-scandal-only-latest-headache-frances-hollande