Reduced Rate | French Senate Committee Overturns 7% VAT Plans

January 9, 2012 – 5:47 am

Within the framework of its examination of the country’s end of year supplementary finance bill, the French Senate finance committee, with its now left-wing majority, abolished government plans to increase the 5.5% reduced rate of value-added tax (VAT) to 7% for certain products and services. The committee also elected to abolish plans to freeze the income tax scale in 2012 and 2013 and to return instead to indexing the tax scale to inflation.

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Defending its decision, the committee argued in its release that both measures announced by Prime Minister Franois Fillon in November as part of the government’s second austerity package, would weigh heavily on purchasing power, on household consumption and on growth.

Although the National Assembly will have the final say on the collective budget, and on the latest amendments, the committee’s decision to abolish the 7% rate will come as a welcome, albeit probably short-lived, relief for booksellers in France and for unions.

When the government’s plans were initially unveiled, the proposals provoked outrage across the entire sector.

Indeed, the national union of publishers in France, SNE, bitterly

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