VAT rise voted through by MPs

A RISE in the standard rate of VAT has moved a step further with its adoption by the National Assembly MPs.

The measure, which would mean a rise from 19.6% to 21.2%, from October 1, still has to go to the Senate, along with the rest of the Corrective Finance Law for 2012. This is supposed to be rubber stamped by March 9, when MPs and senators take a break as electoral campaigns get under way.

The government is determined to push the measure through – despite an embarrassing setback when the assembly’s finance committee initially struck it out of the draft law due to poor attendance by government MPs.

Socialist presidential candidate François Hollande, who considers a VAT raise “unjust and ineffective”, has said he will reverse it if he gets in.

The idea of the increase, described as “social VAT”, is that it would raise money that would enable to government to lower social charges on businesses, thus making them more competitive.

Also voted through in the bill was the new 1% financial transactions tax, meant to apply in France from the start of August (but which the government hopes to see also taken up by around 10 other EU countries shortly afterwards).

The vote came as the Senate – which is left-wing dominated – voted against a bill proposed by the ruling UMP limiting the right to strike in the air industry. The bill was the cause of the recent strikes and flight cancellations at French airports.

It will now go before a mixed committee from both houses before going back to both houses again, with the National Assembly having the final word.

Photo: David Monniaux