Feb. 8 (Bloomberg) -- President Nicolas Sarkozy’s cabinet tabled amendments to the 2012 budget that will bring the European Stability Mechanism into operation in July, as well as raising France’s sales tax rate and creating a tax on share trading in the country.
Leaders of euro area countries agreed on Dec. 9 in Brussels to bring the stability mechanism, or ESM, into force a year earlier than expected in an effort to help contain the region’s two-year old sovereign debt crisis. The plan requires France to pay in 6.5 billion euros ($8.6 billion) into the ESM in two tranches in 2012, increasing the nation’s debt burden to 89.1 percent of gross domestic product, the finance ministry said today in Paris.
The amendments also include legislation that will create a tax on share trading in big French companies starting in August, as well as an increase in the nation’s main rate of sales tax and a corresponding cut in payroll taxes that was announced by Sarkozy on Jan. 29.
The 2012 budget is based on economic growth of 0.5 percent for the year and 10-year French government bond yields of 3.7 percent.
--Editor: David Whitehouse.
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