France cuts meal tax

The French government has slashed its high tax on restaurant meals in an effort to help out ailing cafes and restaurants. Reporter Genevieve Oger has the story.
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LISA MULLINS: The French government made a change today that it hopes will have an immediate impact. It slashed France’s high tax on restaurant meals. The move is aimed at helping out France’s ailing cafes and restaurants. They have been hard hit by the economic downturn, as people cut back on eating out. Genevieve Oger reports from Paris.

GENEVIEVE OGER: It seems like a typical afternoon in the Henri Quatre Tavern in central Paris. A handful of customers are lingering over dessert at this upscale wine bar. But it’s not such a typical day; the sales tax on restaurants and cafes is dropping today from about 20 percent, down to five percent.  That’s something the industry has been lobbying for years. Henry Quatre Manager, Philippe Virmoux points to the new prices listed on the blackboard.

PHILIPPE VIRMOUX: [TRANSLATED TO ENGLISH FROM FRENCH] Prices have dropped today on our most popular items. On coffee, on house specials, we brought prices down by 12 percent, because people expect it. Our regulars especially do, and also the tourists.

GENEVIEVE OGER: The tax cut is expected to cost the French government up to 3 billion dollars a year, but the restaurant industry employs about 700 thousand people in France. As part of the deal, restaurants have agreed to create 40 thousand more jobs, and increase wages. The industry has also pledged to lower prices on a handful of items, though its up to individual establishments to decide whether to comply. Across town, prices won’t drop at Le Clairon, a working class bar and restaurant. Owner Christine Liard doesn’t think the lower tax will help her business much. For one thing, it doesn’t apply to alcoholic beverages.

CHRISTINE LIARD: [TRANSLATED TO ENGLISH FROM FRENCH] I don’t expect much. It only applies to some of the things we sell; it won’t change our staffing at all. For us, it won’t make one bit of difference. It’s too bad it doesn’t apply to everything.

GENEVIEVE OGER: The daily lunch special at this café goes for about 11 dollars, and an espresso a dollar 80, making it one of the least expensive places to eat and drink in town. This customer says the tax relief won’t change her habits. She lives nearby and says she comes because the people are nice and the food is good. But Christine Pujol, President of the UMIH, a group that represents France’s 180 thousand cafes and restaurants, says the tax reduction will make a big difference.

CHRISTINE PUJOL: Well, it’s important because it’s going to give new opportunities for managing their restaurant, you know? They will pay less taxes, and they will have all this money. It’s really savings for them.

GENEVIEVE OGER: But many restaurant owners aren’t so sure. They’re worried about having to apply different tax rates for different items in the same meal, and they’re not convinced the lower tax will bring more people in the door. For The World, I’m Genevieve Oger in Paris.

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