France rues tax cut on meals

Article reports that President Nicolas Sarkozy's decision to cut value-added tax on restaurant meals earlier in 2009 risks giving him indigestion.

Lowering VAT from 19.6% to 5.5% in 185,000 restaurants, bars and cafés was supposed to reduce prices substantially, raise staff wages and create 40,000 jobs. None of those has yet materialised but the government stands to lose €2.4bn in revenue in a full fiscal year from the cut.

France24, 24.11.09: Senate rejects move to end VAT discount for restaurants http://www.france24.com/en/20091124-senate-rejects-end-vat-discount-restaurants-catering-france-tax

ESO: Background information: France raises a glass to VAT victory http://www.europeansources.info/record/france-raises-a-glass-to-vat-victory/

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