VAT: The Great Restaurant Bluff

Few are the restaurants in France that really played the game and reduced their VAT from 19.6% to 5.5% effective July 1st, 2009.In an agreement signed in March, restaurant owners pledged to reduce prices of at least seven products on their menus, to raise the salaries of their employees and to create, within two years, 40,000 jobs. It was part of the deal with the French state, since the reduction in VAT was estimated to have cost the government €2.4 billion in tax revenues.But there is no law. If restaurateurs decide not lower their VAT, there’s little the authorities can do about it. So barely half of them actually did. Some say business is suffering too much because of the financial crisis; others make the reduction in VAT a marketing tool to attract customers, while not significantly dropping prices.The ‘Envoye Special’ journalists spotlight the intense lobbying by the restaurant trade since 2000: electoral blackmail, pressure on ministers, visits to Brussels, demonstrations.So who really benefits from this reduction in VAT, restaurateurs, employees, consumers? The film is an investigation into the major tax break and a story of the intense lobbying.