Tax savings spread on French bread

Written by admin on April 30, 2009 – 5:55 pm -

If your travel plans include a trip to France after July 1st, you’re going to be in for a cost savings treat when you go out to restaurants and the bill is presented. But be forewarned — the discount will only apply to certain dishes (such as the menu of the day) and you won’t be raising your wine glass in celebration of the reduction since it’s not applicable to alcohol.

France’s President Nicholas Sarkozy has instructed the country’s estimated 200,000 restaurant owners to pass on a portion of the 19.6 percent VAT (value added tax) that will be reduced to 5.5 percent. France has one of the highest tax rates in the European Union.

For years, this has been a bone of contention among hoteliers and restaurateurs, who said the added cost discouraged consumers by inflating meal costs. The high taxation has also been an impediment for hotel and restaurant owners, as well as potential ones, who want to invest in the hospitality industry.

Sarkozy is banking on the reduction giving a needed boost to restaurateurs who are feeling the effect of the weakened economy. French residents are cutting back on meals out and tourists are eating out less or at less expensive restaurants. Restaurants and bistros have lost between 20 and 50 percent of their income between January and March. Many have introduced more modestly priced “crisis menus” to lure patrons back.

It’s also anticipated more workers will be hired and it will give France’s restaurants a jump-start. Sarkozy’s campaign promises included this cut and he’s making good on it. The tax-cut agreement includes a commitment by restaurant and hotel owners to work with the government to improve pay, training, and working conditions.

Christine Pujol, President of the Union des Métiers et des Industries de l’Hôtellerie, the largest industry union says, “We’ve been working for 15 years for this and we’re most satisfied. It will provide a needed boost.”

Some critics feel the cut may not be judicious in the long run. It’s easy to lower taxes but hard to subsequently raise them.

Something of something is a whole lot better than a lot of nothing or having to shutter a restaurant’s doors.

Chain restaurants may have a bit of a cushion but what about privately owned establishments? No matter where you live, people are feeling an economic pinch and many are buying frozen pizza at the grocery store rather than ordering carry-out or taking the family out to dinner.

In the meantime, enjoy the savings. Don’t anticipate not having to tip the service staff.  You’ll still be expected to leave them 15 percent – and more if you think it’s merited.

Do you think restaurants in the US will follow suit if they haven’t already?

Karen Fawcett is president of BonjourParis.

Tags: , , ,
Posted in Consumer Traveler |