French senate committee overturns 7 per cent VAT plans
According to a leading tax news website, 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.
Defending its decision, the committee argued in its release that
both measures announced by Prime Minister François 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.
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