Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Netanyahu deletes tweet featuring photo of James Foley

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014

Read more

FRANCE IN FOCUS

FRANCE IN FOCUS

Read more

FOCUS

Lifting the veil over China's air pollution

Read more

ENCORE!

Tango Takeover in Paris

Read more

WEB NEWS

Calls for ISIS media blackout after execution of James Foley

Read more

IN THE PAPERS

'Steely resolve of reporters exploited by pared-down employers'

Read more

BUSINESS DAILY

US judge calls Argentina bond swap offer illegal

Read more

  • Europe launches navigation satellites to rival GPS

    Read more

  • Besieged by problems, Hollande faces unhappy return from summer holidays

    Read more

  • Iraqi Sunnis quit govt talks after mosque massacre

    Read more

  • US demands Russia withdraw aid convoy from Ukraine

    Read more

  • Rights group sues US government over ‘deportation mill’

    Read more

  • Colombian army and FARC rebels begin work on ceasefire

    Read more

  • US National Guard starts to pull out of embattled Missouri town

    Read more

  • PSG fall flat once more against Evian

    Read more

  • Fed Chair says US job market still hampered by Great Recession

    Read more

  • August 22, 1914: The bloodiest day in French military history

    Read more

  • Central African Republic announces coalition cabinet

    Read more

  • Hamas publicly executes "informers"

    Read more

  • French firebrand leftist to quit party presidency, but not politics

    Read more

  • Fear of Ebola sky-high among Air France workers

    Read more

  • US says Islamic State threat 'beyond anything we've seen'

    Read more

  • Malaysia mourns as remains of MH17 victims arrive home

    Read more

  • Turkish Foreign Minister Davutoglu set to be Erdogan's new PM

    Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

France

French homes to feel pinch of austerity in 2012

Text by Joseph BAMAT

Latest update : 2012-01-02

With wages languishing and consumer prices once again on the rise, 2012 could prove to be a particularly tough year for French households.

Austerity measures adopted by the French Parliament in November 2011 are going into effect in January, raising the price of many consumer goods and services across the country. An increase in the sales tax, or VAT, as well as a hike in transport and gas prices could make 2012 a difficult year for French households.

As part of a deficit-reducing plan championed by French Prime Minister Francois Fillon last year, VAT will go from 5.5% to 7% for many consumer goods this week, with some notable exceptions. The tax rise was adopted by the lower-house National Assembly, controlled by President Nicolas Sarkozy’s conservative UMP party.

The measure, part of the 2012 state budget, was passed in a 315-198 vote on November 16, with MPs of the main opposition Socialist Party voting in mass against it.

French people will pay more for some food items, including sodas, as well as books and museum visits. Bills for restaurants, hotels and in-house services, such as house cleaning and repairs, will also be more expensive in 2012.

Basic food items, such as water, non-alcoholic beverages, fruits and vegetables will continue to be taxed at 5.5% in France. Hard alcohol and other food products that are not considered basic necessities will be taxed at 7% in an effort to plug the country's budget deficit.

Consumer advocates said the tax hikes were not consistent with buyer’s real needs, pointing to the rise in the price of bakery sandwiches but not of pastries. Caviar, considered a luxury good, will continue to be taxed at 19%, but chocolates and duck liver pâté are being spared the higher levy and will retain a 5.5% sales tax.

“We agree that the consumer should participate in the reduction of the state’s deficits, but we denounce the absence of logic in the tax rises, especially when consumers are the ones most affected by the government’s measures,” Olivier Androt, a food specialist for the Federal Union of Consumers, told FRANCE 24.

Consumer groups also decried a general rise in the price of transportation in 2012, which they said would place a heavy burden on ordinary people. The cost of Paris-region commuter trains and buses saw a rise of 1.5% even before January, and the national railway said it would increase the price of high-speed and interregional rail by 3.2% starting on January 3.

Gas on the rise

Apart from more expensive food and transport, the French were also worried by the prospect of heavier gas bills. Households as well as businesses will pay an average of 4.4% more for gas this winter. The cost of electricity will remain the same, the government said.

In an effort to protect France’s poorest, the government said the gas hike would be accompanied by a 10% reduction in gas for individuals earning less than 7,771 euros per year and couples who earned less than 11,657 euros per year.

Addressing French citizens in a recorded television message on New Year’s eve, President Sarkozy said there would be no new austerity measures in 2012 and that his government’s current cutbacks were necessary.

Sarkozy, who is widely expected to run for re-election in April, is facing 12-year high unemployment in France that reached 2.8 million people in November.

The CGT, France’s largest union, has called for a nationwide strike on January 18 in protest at the current austerity measures.

Date created : 2012-01-02

  • FRANCE

    Sarkozy rules out new austerity plan for 2012

    Read more

  • FRANCE - ECONOMY

    Record unemployment hits Sarkozy's re-election hopes

    Read more

  • FRANCE

    Socialists set up watchdog to survey Sarkozy travel costs

    Read more

COMMENT(S)