Sarkozy pledges to protect purchasing power

15th June 2007, Comments 0 comments

PARIS, June 15, 2007 (AFP) - French President Nicolas Sarkozy pledged on Thursday to reject any sales tax hike that hurt consumers' buying power, after opposition Socialists highlighted the issue ahead of a key general election.

PARIS, June 15, 2007 (AFP) - French President Nicolas Sarkozy pledged on Thursday to reject any sales tax hike that hurt consumers' buying power, after opposition Socialists highlighted the issue ahead of a key general election.

Sarkozy said in a statement that he would not accept "any increase in VAT (value added tax) that reduced the purchasing power of French consumers."

His remarks were issued after a mooted plan to switch the financing of French health care from payroll charges to higher sales taxes shook up the final round of legislative elections.

Sarkozy hopes the vote will give him a clear mandate to pursue reforms.

In calling on Tuesday for debate on the measure, right-wing Prime Minister Francois Fillon sparked an outcry from the left, with the Socialist Party accusing him of aiming to finance tax breaks for the rich with money from ordinary workers.

In his statement, Sarkozy said that Fillon had only asked two ministers "to study a VAT mechanism that exists in a certain number of countries and which eases fiscal pressure on employment."

Fillon told the conservative daily Le Figaro in an interview to appear Friday that his government would only proceed with the plan "if we are sure that it would not lead to higher prices."

The French premier also charged at an electoral rally in Paris late Thursday that the left "prefers to sacrifice the (nation's) general interest, rather than sacrifice a partisan position," because leading Socialists had appeared to back a similar plan.

Socialist deputy Dominique Strauss-Khan, who Fillon identified by name as one such leader, claimed Wednesday that the measure would cause "turmoil in the daily life and wallets of many French citizens."

The new government is seeking ways to reduce "social charges" in France that can nearly double the cost of hiring workers.

They are considered a factor behind what has been termed "delocalisation," the shifting of production, and jobs, from France to low-cost countries.

Under the sales tax proposal, companies would be relieved of some health-care charges to boost employment. The burden would be switched to households via a higher sales tax.

But that could raise French VAT to almost 25 percent, which would be one of the steepest rates in the European Union.


Copyright AFP

Subject: French news

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