The French Government’s move to increase VAT on restaurant food and hotel accommodation from 7% to 10% will have an impact on hopes of securing a VAT reduction in the UK, according to Jacques Borel, the man leading the campaign to reduce the tax for the sector in this country.
However, Borel, who is calling for VAT for the industry to be cut from 20% to 5%, told M&C Report that it was too early to draw conclusions about what effect the announcement in France would have at this stage of the lobbying effort in Britain.
The increases in France, which are set to take effect from January 2014, are part of a plan to offset tax breaks for businesses worth Euro20bn (£16bn). In France, the VAT rate for restaurant food and hotel accommodation was cut from 19.6% to 5.5% in 2009. The rate was later increased to 7%.
Asked if the latest announcement would affect the campaign to reduce VAT in the UK, Borel said: “For sure it will have an impact on the campaign. It’s obvious.”
But he cautioned against drawing conclusions at this stage.
“When you are in the beginning of negotiations don’t try to say what is the final answer,” Borel said. “It is a mistake. We should never draw conclusions as long as the negotiations have not ended.”
In October, France's National Assembly said restaurants had failed to meet their side of the bargain and employ 40,000 more staff and reduce prices.
But Borel said there had been 234,000 jobs created in the industry as a result of the VAT cuts. “When some people on the left say there has been no creation of jobs [due to the fall in VAT] it’s totally untrue,” he stressed.
The Daily Telegraph this morning reported that trade bodies in France claim that every percentage point added to VAT destroys 10,000 jobs in the sector.
Borel’s said his VAT Club now has 50 members from the industry and he expects more to join by the end of the year. Among those companies that have signed up include Punch Taverns, Pizza Hut, Prezzo, Road Chef, Heineken UK, TGI Friday’s, JD Wetherspoon, Shepherd Neame, Fuller’s, Charles Wells, St Austell and Subway.
The French Government last month announced plans to increase beer duty by 160% to fund “social programmes”, including help for the elderly. Industry representatives had warned that this could lead to a 20% rise in the price of beer for consumers.
