French plans to raise theme park tax stalls

PARIS – French government plans to hike sales tax at amusement parks hit the rocks on Tuesday as a key panel of lawmakers rejected the measure, part of a 12 billion euro package of budget savings.

President Nicolas Sarkozy’s government unveiled plans last week to raise extra revenues in 2011 and 2012 to keep France’s deficit reduction targets in reach, counting mainly on scrapping some tax breaks and raising value added tax on strong alcohol, fizzy drinks and amusement parks.

The government aimed to raise 11 million euros this year and 90 million euros next year by raising the VAT at amusement parks from 5.5 percent to 19.6 percent.

However, the lower house of parliament’s finance commission spurned the plan in the face of opposition from some conservative lawmakers concerned about the impact on tourism in their districts.

After its rejection in the commission, the tax hike has little chance of gaining sufficient support in a plenary session of the National Assembly, effectively killing it unless the government decides to make a big effort to get it passed.

“We will propose measures to make up for the loss (of revenue) as soon as Monday,” said Gilles Carrez, who is in charge of budget issues at the National Assembly for Sarkozy’s UMP party.

(Reuters)