Proposed VAT Reduction for Restaurants

[jamiemaw]

The BBC reported today that tax experts from across the EU are meeting on Thursday to discuss France's demand to be allowed to cut value added tax (VAT) on restaurant meals.

President Jacques Chirac has long promised to bring restaurant VAT - currently at 19.6% - in line with the 5.5% charged at fast-food outlets. Apparently he promised the change during the last election campaign but requires unanimous EU approval.

The rest of the report is here.

A near 20% tax seems painfully high; shouldn't the relationship be reversed so that fast food is charged the higher 'Fat Tax' or would that be looked upon as an unfair burden on the poor and mentally-challenged?

Edited May 12, 2005 by jamiemaw (log)

[Ptipois]

A near 20% tax seems painfully high; shouldn't the relationship be reversed so that fast food is charged the higher 'Fat Tax' or would that be looked upon as an unfair burden on the poor and mentally-challenged?

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I totally agree with you. If the world turned right, I suppose that would be the case.

[therese]

Seems like I heard recently that a U.S. city was considering taxing fast food restaurants at a higher rate. Maybe Detroit?

[raisab]

I read an article, I don't remember where, that even if this passes, expect no reduction in restaurant meal prices. Basically the owners will be pocketing the savings. I guess if you look at it from their perspective it seems logical, we are used to paying a certain price for their meals and business is good. Why change anything? Any opinions?

Edited for spelling

Edited May 12, 2005 by raisab (log)

[jamiemaw]

I read an article, I don't remember where, that even if this passes, expect no reduction in restaurant meal prices. Basically the owners will be pocketing the savings. I guess if you look at it from their perspective it seems logical, we are used to paying a certain price for thier meals and business is good.  Why change anything? Any opinions?

←

It would be human nature to pocket the winnings, yes? But what the written BBC report (as opposed to the televised report) as above-thread doesn't make as clear is that the restaurauteur's protest is founded in several matters of 'principal':

1. That the distinction between the fast food and regular restaurant taxation levels is patently unfair;

2. That M. Chirac promised the tax relief in the last election campaign; and

3. The restaurauteurs maintain that business is in fact off due to a stagnant economy and perhaps as a result of the tax.

Some observers feel that the tax relief is unlikely to pass unanimously due to other countries' (Germany and a couple of Scandinavian countries) fear that it would create a precedent there. If unsuccessful , of course Chirac's position will be

that he tried.

Edited May 12, 2005 by jamiemaw (log)

[Ptipois]

I read an article, I don't remember where, that even if this passes, expect no reduction in restaurant meal prices. Basically the owners will be pocketing the savings. I guess if you look at it from their perspective it seems logical, we are used to paying a certain price for thier meals and business is good.  Why change anything? Any opinions?

←

Lowering or raising the prices is not particularly the concern of French restaurant owners. A lowering of the VAT tax would allow them to hire more cooks and more waiters. The present situation is often the cause of dire understaffing. That's the most frequent complain I hear from chefs and restaurant owners concerning the high VAT.

[Louisa Chu]

Yes, but this is a complicated issue - as are most tax talks - and tax talks in France in particular. The original reason that fast food restos had lower taxes - true or false, right or wrong - is that they're more labour intensive and could/would hire more people. Is it right that sit-down resto owners are taxed more? I don't know yet. But I think it's a good bet that I - as a French restaurant worker - will see no extra benefits from a cut - and instead worry about what benefits will be further cut. And ditto that as a diner. Is this supposed to be the French translation of that American trickle-down theory from back in the day?

Edited May 12, 2005 by LKL Chu (log)

[Ptipois]

But I think it's a good bet that I - as a French restaurant worker - will see no extra benefits from a cut - and instead worry about what benefits will be further cut. And ditto that as a diner.

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Most likely, you will not be paid a centime more. And the diners won't pay any less than they do. But more of your colleagues will be hired, for as meager a salary as they're already paid in this trade.

[chefzadi]

But I think it's a good bet that I - as a French restaurant worker - will see no extra benefits from a cut - and instead worry about what benefits will be further cut. And ditto that as a diner.

←

Most likely, you will not be paid a centime more. And the diners won't pay any less than they do. But more of your colleagues will be hired, for as meager a salary as they're already paid in this trade.

←

Whenever my wife wants a good laugh she looks at my first pay stubs when I was working in France.

Although I have to say American restaurants have painfully small kitchens and smaller BOH staff compared to French restaurants.

[John Talbott]

For those interested, Renaud Dutreil, Minister of Big, Little and come to think of it, all Commerce, announced Thursday (vide Le Monde + Le Figaro) that while the French were unable to get the EU to lower the TVA aka VAT for hotels & restos from 20% to 5.5%, as it is for fast-food (read McDo's) places (will someone explain that to me), the government would "lighten" their social and fiscal burden.

1. I am waiting with baited breath to see how the governmental System "D" works.

2. You should not wait for 14.5% reductions.