Bloomberg News

Sarkozy Says He Raised French Sales Tax to Hit Imported Products

February 01, 2012

Feb. 1 (Bloomberg) -- French President Nicolas Sarkozy said he’s raising sales taxes to squeeze revenue out of a surge in imports.

“In the past 10 years, you’ve doubled the amount you’ve bought from overseas,” he told a conference of entrepreneurs in Paris. “We all want flat-screen TV’s, psychedelic smart phones, and computers. There’s nothing wrong with these goods but none of them are made in France.”

“Isn’t it reasonable to make imports play a greater role in paying for our welfare state,” he said.

Sarkozy, who faces re-election in just under three months, announced Jan. 29 that value-added tax on some goods will be raised 1.6 percentage points to pay for a 13 billion-euro ($17 billion) cut in social charges that’s aimed at making French labor costs more competitive.

Sarkozy cited Germany’s success in carrying out similar reforms, as well as allowing company specific labor accords that Sarkozy wants to expand in France.

“The Germans have the great merit of having done some very smart things,” Sarkozy said. “In this country, we are very good at trying everything that doesn’t work,” he said, citing the decrease in the retirement age and working week instituted by previous Socialist governments. “We’re experts at it. If these measures were so smart, why did no one else follow us?”

Sarkozy addressed why he’s pushing through an unpopular reform just before an elections where he’s trailing in the polls behind Socialist challenger Francois Hollande.

“The figures don’t lie: France isn’t just losing ground to China and India, but within Europe,” he said. “After the presidential elections we have the legislative elections. After all that campaigning, everyone’s going to need a break. So we’d have to wait until after the summer. That’s not my style.”

--Editors: James Hertling, Jeffrey Donovan

-0- Feb/01/2012 12:34 GMT

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 -0- Feb/01/2012 12:25 GMT


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