France's cabinet on Wednesday approved plans for a 1.6 percentage point hike in the value-added sales tax as part of measures to boost the country's ailing economy.

The hike, which will bring the sales tax to 21.2 percent, will take effect on October 1 and is expected to bring in 10.6 billion euros ($14 billion) to state coffers.

The so-called "social sales tax" aims to shift the burden of paying for social security from employers to consumers and help create jobs while making French firms more competitive against German rivals with lower charges.

The sales tax increase is to be matched by a decrease in employers' payroll contributions, helping them compete with producers in lower income or lower tax economies and boosting French exports.

French authorities have said the decrease in payroll charges will affect 80 percent of industrial jobs, including 75 percent of jobs in automaking, a key part of the country's remaining industrial base.

The government estimates the measure will create 100,000 jobs in three years but economists have warned it could also hurt consumers' purchasing power.

The project is to be debated Monday in France's lower house, the National Assembly, and is expected to be approved by the end of February or in early March.

The measure comes as President Nicolas Sarkozy looks to win support ahead of a presidential election in April. Socialist candidate Francois Hollande is leading in the polls ahead of the vote.