Monday, July 23, 2007

Service Compris


Sarko will go to Brussels in September to plead for France's right to reduce the VAT on restaurant dinners and hotel stays from 19.6 to 5.5 percent, renewing a pledge already made by Jacques Chirac. This is an interesting case for those interested in the raison d'être of European regulatory regimes to contemplate. France is opposed on this by Germany, Sweden, Denmark, and other states.

With respect to the debate discussed in comments here, this would appear to be a case that falls into a different category. The French government is not using Europe as an alibi to impose a tax it actually wants while pretending not to want it, nor is it using a transnational agreement to remain committed to a tax in the face of democratic pressures to lower it. Rather, it wants to lower the tax but is constrained by an agreement with others whose economies are differently structured and which do fear democratic pressures. Why should a supposedly liberal Europe favor this rigidity?

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