French Budget Minister Jerome Cahuzac resigned Tuesday after prosecutors announced that a full investigation would be conducted into his secret Swiss account, the French presidency said.
President Francois Hollande "terminated the function of Jerome Cahuzac," the presidency said in a statement, adding that Europe Minister Bernard Cazeneuve is appointed to replace Cahuzac to be the new budget minister.
Cahuzac submitted his request of resignation to the president after he was placed under further inquiry on alleged tax fraud, although he declared innocence in his resignation statement.
Earlier in January, Paris prosecutors opened a preliminary investigation into Cahuzac over allegations that he had an undisclosed bank account in Switzerland. This investigation came after a media report said he had moved his undeclared UBS account in Geneva to Singapore in 2010.
As the budget minister, Cahuzac is the key supervisor for the new tax policies on riches proposed by Hollande's government, which was designed to help bolster the country's sluggish economy.
Cahuzac expected the new tax would be part of this year's finance law, if approved, the tax will be included in the government's budget for 2014.
But the tax on the super-rich has prompted high profile people to threaten leaving the country and avoid the tax.
Some political analysts said Cahuzac's leave from the budget minister post will make it tougher for the Socialist government to carry out its policy.