Bloomberg News

Sarkozy’s Lawmakers Back Sales-Tax Increase Opposed by Public

February 01, 2012

Jan. 31 (Bloomberg) -- Members of parliament from French President Nicolas Sarkozy’s political party said they back his plan to fund a 13 billion-euro ($17 billion) cut in payroll charges through higher sales taxes.

Sarkozy met today with members of the ruling Union for a Popular Movement to explain the measures, which he announced Jan. 29 and are opposed by public opinion. France holds presidential elections in April and May and legislative elections in June.

“The majority is unified and motivated,” Christian Estrosi, a UMP member from the Mediterranean city of Nice, said after the meeting. “The majority realizes that what’s important is to do what’s good for France, regardless of the elections.”

Sarkozy’s measures would raise the rate of tax on most goods and services by 1.6 percentage points to 21.2 percent. The government would use the extra revenue to finance a cut in payroll costs paid by employers to boost competitiveness.

“The cost of labor is a priority if we want to remain competitive,” Jerome Chartier, a deputy from suburban Paris, said after the meeting. “Nobody raised any objections.”

By pressing an unpopular tax less than three months before the vote, Sarkozy is showing “courage” and underlining that he’s a better economic manager than Socialist candidate Francois Hollande, the deputies said. Hollande leads Sarkozy in polls.

“The unemployed can’t wait,” said Sebastien Huyghe, a UMP deputy from the north of the country.

A BVA poll for BFM TV on Jan. 12 showed 55 percent of the French are opposed to simultaneously increasing sales tax and cutting labor charges, while 43 percent favor it.

The deputies said Sarkozy didn’t indicate when he’ll announce his candidacy for the elections, which are scheduled for April 22 and May 6.

--Editors: Eddie Buckle, Jennifer M. Freedman

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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