In the face of falling tourism to France the French government adopted  two new laws this summer that could theoretically stimulate ourism.

As of July 1, Value Added Tax (VAT) was reduced from 19.6 percent to 5.5 percent for all food and beverage outlets (F & B), especially at cafes and restaurants. The European Commission accepted the VAT reduction.

An agreement signed at the end of April between the government and the association of hotels, restaurants and cafes stipulated that the profession would in return, create new jobs and lower prices by 11.8 percent onfood and beverag e items.

Trade unions promised that 80 percent of the profession would lower their prices. Last Wednesday, an upset minister of Economic Affairs was forced to acknowledge the fact that only one over two F & B owners played fair with the new rules.

Only large restaurant chains seem to have respected the reduced rate in VAT. For independent restaurants, studies from the Ministry show that only 30 percent of them implemented price lowering.

Economic Affairs Minister Christine Lagarde has threatened the profession to control thoroughly the implementation of the new directives. However, it might be difficult for the government to do so. The agreement signed between the government and the association of hotels, restaurants and cafes stipulates that price reductions are not compulsory.

The second law, adopted on July 23, stirred up hefty debates in the political world as well as among unions. It fixes rules on the possibility of working on Sunday, especially with the opening of shops. According to a poll from the daily “Libération,” 55 percent of French people were against a law to ease working possibilities on Sunday. 58 percent even believe that it would not have any positive effect on employment.

Some 500 designated touristic and spa areas will see shops or department stores opened on Sunday. Large metropolitan areas of over a million inhabitants will also be able to have shops opened with Lyon and the Alsace region exempted.

The controversy comes now from the fact that workers in designated tourist zones will not be paid the usual double time for working on a Sunday. Tourists will probably face employees’ reluctance to serve or some social movements during their Sunday shopping experience.

Not necessarily a good thing, as France already saw its total foreign overnight in hotels are down by 15 percent from January to May 2009 compared to 2008.

31 July 2009