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robert brown

eGullet is Watching You, Monsieur le Chef.

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I was curious about the question raised way above: is this VAT reduction for restaurants really a “done deal?” because while I know that Raffarin and Chirac have promised to do it, I’ve see nothing that says it’s a sure thing and indeed, anything that has to go through Brussels involves a horse-trade, so who knows? Thus I asked a friend, a keen observer of the restaurant and political situation in Paris, and this was his reply (edited a bit by myself):

“The VAT reduction: no, it's not a sure thing, although everybody pretends it'll happen. When? Who knows? The Germans, for instance, disagree: and since we're also Europeans, we have to take other countries' points of view into consideration. We just can't do what we want to do, and decide from one day to another we're gonna lower our VAT from 19.6 to 5.5% -- let's be serious, here! But the thing is, Chirac and Raffarin made a big mistake the day they made that promise: because they knew it had to be an European decision.

Next thing: will restaurants lower their prices if the VAT goes down? Never! That's what they said to be popular! But what the unions have promised is to hire and to raise the salaries.

Someone on the thread wrote that "There is also an acute labor shortage in the restaurant industry. What would best correct that?" Would something like "the sexiness of the job" sound like a correct answer? For the moment, being a chef is not hot, fun, socially rewarding -- except when your name is Ducasse. But what about the 23 year old kid, gifted, running his own place? Yes, he does care about the VAT. But he'd also like people (who? the press, of course) to stop talking about the same old guys -- and I do respect Ducasse, of course. I think it's more fun to be a chef in the US than in France, really...”

Which last comment (this is me here, John, talking) is certainly eye-opening and surprising to me.


John Talbott

blog John Talbott's Paris

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This dicussions have gone on for ever in France as well as in Belgium, notably in view of elections.

The European Union has already allowed in the past some high VAT exceptions for labour intensive work: European countries could choose which branch they would like to have a lower VAT applied. This was done in some countries for example for hairdressers: nowhere did I see lower prices, which I can understand since the difference between a haircut of 20 € at 21 or 6 % VAT is not that big, so the hairdressers said that it gave them the necessary help to continue in economic cutdown.

However, since the checks are much higher in restaurants in general, there could be a big difference.

When I went to a good restaurant (bib gourmand) here in Brussels, just before federal elections, that restaurant did already mention the difference on the menu: I paid really the 15 % less.

Since the restaurant business is in difficulty, it could make a difference if they lower their prices.

(By the way: taxes are in general not a matter that falls into the law of the European Union, but are only fixed by national law; 'Brussels' has therefore almost nothing to do with it. The relation between Brussels and the lower VAT in the mentioned example of hairdressers is therefore not quite clear to me, but nevertheless it happened.)

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discussions have gone on for ever

That was 2004

Yes indeed - this discussion has been silent for many years but it seems that something has finally happened today in Brussels.

Changes like this can only be done on the basis of consensus among the EU's 27 members - who thought up this daft rule? - better not ask but it was also arrived at by consensus.

Anyway, the path is unblocked and the delectable Madame Lagarde now has a free hand to reduce the VAT on French restaurant bills ftom the current 19.6% to 5.5%

All going well, this means that a dinner for two which now costs €100 should now cost €88 if the saving is passed on to the customer (if my mental arithmetic is good).

Time to go out and celebrate? Well, let's see. Will the restaurants be transparent about this or will we start to hear about the need to cover increased wage costs, compensate for hard economic times, etc, etc?

Does the Laffer curve apply when it comes to eating in restaurants? Should at least be worth a try.

Anyway - remember you heard this first on eGullet.


Edited by kerriar (log)

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Anyway, the path is unblocked and the delectable Madame Lagarde now has a free hand to reduce the VAT on French restaurant bills ftom the current 19.6% to 5.5%

Well I read somewhere that because of the loss of revenue to the state, the President of the Republic will more likely lower it halfway - the figure I saw was 10%. On verra.

John Talbott

blog John Talbott's Paris

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Drat, I couldn't find the article I read last week, but the website for the JDD says:

"Mais Paris pourrait modérer ses ambitions, en réclamant une réduction de la taxe de 19,6% à 10% et non à 5,5%,"

and while my French is awful bad, that 10% number seems to have legs.


John Talbott

blog John Talbott's Paris

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I'm not sure when I'll have my next opportunity to dine in Paris, but do keep us posted.

Will this have any impact on tipping practices in restaurants in France? That's always been a murky area for Americans under any circumstances. Any advice would be helpful.



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discussions have gone on for ever

All going well, this means that a dinner for two which now costs €100 should now cost €88 if the saving is passed on to the customer (if my mental arithmetic is good).

I would be surprised if restaurants passed the savings on to customers. However, I do hope they use it to increase salaries, which are in many cases not a very liveable wage.


www.parisnotebook.wordpress.com

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Will this have any impact on tipping practices in restaurants in France?  That's always been a murky area for Americans under any circumstances.  Any advice would be helpful.

Please consult this topic for "All You Need to Know......"

John Talbott

blog John Talbott's Paris

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Thursday, in L'Express, Anne-Laure Pham had an article about the four chefs at Ze Kitchen Galerie, Glou, Petite Venise + Le Château Cordeillan-Bages responding about whether they will lower their menu prices when the TVA goes down and for different reasons, essentially saying - don't hold your breath.


John Talbott

blog John Talbott's Paris

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Getting back to Robert's title "eGullet is Watching You, Monsieur le Chef. VAT....." yesterday's JDD had an interview in which was confirmed what's already been said; that restaurateurs can/may reduce the TVA to 5.5% vs the 19.6% now charged to customers, that it will most likely take place in July, but in addition stated that there will be a mechanism to oversee that changes are made; the committee will consist of restaurateurs, public authorities, "qualified" personalities {here's our big chance}, and consumer organizations {chance #2}.


John Talbott

blog John Talbott's Paris

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I would be surprised if restaurants passed the savings on to customers.  However, I do hope they use it to increase salaries, which are in many cases not a very liveable wage.

Felice is once again, in tune with the citizen sentiment; Figaro published a survey of 11,760 "voters" of whom 12% said they predicted restos would lower prices and 88% said they wouldn't, one reason being to augment salaries or benefits.

John Talbott

blog John Talbott's Paris

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Today's IHT brings us Matthew Saltmarsh {great name eh?} on the subject who says among other things that:

Wine lovers will not be raising their glasses in celebration because the agreement does not cover alcohol.
and
Whether staff in the restaurants will feel the benefit of the tax change, in the form of higher compensation or tips, is an open question.

Interesting Note: the IHT print version of the article has many more juicy things that are now airbrushed out on the NYT online version of the article such as the sentence "The price paid by diners ......will fall by 11.8 percent, rather than the full 14.1 percent....."

Where are you now Daniel Okrent?


John Talbott

blog John Talbott's Paris

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