Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Central African Republic: Brazzaville peace talks suspended

Read more

ENCORE!

High-tech acting king Andy Serkis on Dawn of the Planet of the Apes

Read more

REPORTERS

Hong Kong in rebellion against the 'motherland'

Read more

TALKING EUROPE

Dalia Grybauskaite, President of the Republic of Lithuania

Read more

MIDDLE EAST MATTERS

Gaza: children caught up in the conflict

Read more

IN THE PAPERS

Was the UN chief’s speech in Tel Aviv really a 'shameful message'?

Read more

IN THE PAPERS

France concerned about anti-Semitism

Read more

WEB NEWS

Online movement demands peace in Gaza

Read more

BUSINESS DAILY

Apple aims to satisfy China's hunger for smartphones

Read more

  • UN human rights chief blasts Israel-Gaza ‘war crimes’

    Read more

  • Gaza protests: ‘France imported the Mideast conflict a long time ago’

    Read more

  • Bomb attacks kill ‘scores’ in north Nigeria

    Read more

  • Poland’s Rafal Majka wins 17th stage of Tour de France

    Read more

  • Remains of Flight MH17 victims arrive in the Netherlands

    Read more

  • Two Ukrainian fighter jets shot down over rebel-held territory

    Read more

  • TransAsia Airways Taiwan crash leaves dozens dead

    Read more

  • Video: Fear, death and mourning in Gaza’s Khan Younis

    Read more

  • Young riders raise French hopes for Tour de France

    Read more

  • Defying UK, France to proceed with warships sale to Russia

    Read more

  • Kerry arrives in Israel to push for Gaza ceasefire

    Read more

  • US courts issue conflicting reports on Obamacare

    Read more

  • Video: Lebanon fears fallout from regional turmoil

    Read more

  • Widodo wins Indonesian presidential election

    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)