Starting yesterday France dramatically slashed the VAT at restaurants nationwide to 5.5 percent from a whopping 19.6 percent in a move that may or may not be helpful to cash-strapped diners.
The main objective of the tax break is the help rescue France´s struggling restaurant sector, which has been hard by the current economic slowdown.
But diners ready to make the most of the new savings might find themselves disappointed. Restaurant owners do not have to pass the tax break on to consumers — rather they can use the extra Euros to help boost their own businesses.
Indeed, analysts expect some 40,000 restaurant staffer to be hired under the new scheme — which will cost the French treasury an estimated $2.8 billion. Other options for the extra funds include restaurant renovations or simply preparing existing dishes from higher-quality ingredients.
Despite having some say in how the new tax scale plays out, restaurants are nonetheless being encouraged to both reduce costs on basic dishes or add new, more recession-friendly specials.
Sadly –this being France — alcohol is not covered under the new provisions!