Brussels, 24/01/2003 (Agence Europe) - France is continuing its campaign to obtain a VAT reduction in the catering industry in the context of revising the directive on VAT exemptions for high labour intensive services, which is expected to be launched in March. France has just sent the European Commission a memorandum on the application of a reduced VAT rate for catering. The French Minister for European Affairs, Noëlle Lenoir, held a meeting on the matter on Thursday in Berlin with the German Secretary for Finance, Karl Diller. She announced in a communiqué that in the next few days she would be continuing her efforts to get the memorandum to her Italian, British and Swedish counterparts.
According to the memorandum, if VAT increases from the current rate of 19.6% to 5.5%, around 40,000 jobs could be created in a "sector that is essential in terms of the land conversion and social inclusion". The French government points out that this won't involve making an exception, given that eight Member States are already taxing catering at lower rates.
French catering unions meeting up at the "VAT Club" gave words of support to the French campaign during a press conference. Founding member of the Club, Jacques Borel, estimated that losses in tax receipts would be EUR 3 billion for the French State but, "if we take into account knock-on effects, it will be reduced to a sum of EUR 260-350 million". A body of economists in Paris has disputed this figure, claiming that a reduction in VAT would only lead to the creation of 10,000 jobs and a EUR 4.1 billion loss for state coffers. At the same time, price reductions for consumers would only be 4%.