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July 23, 2009

Paris Lowers VAT, Wallets Unaffected

by Gerry Dryansky

My morning coffee at my favorite café here in Paris comes to 2.2 euros, or more than three dollars, but there's been a change on the check. The VAT that used to be 19.6 percent is now 5.5 percent. The overall price remains the same. 

France's restaurateurs have been lobbying hard for a cut in the VAT. Since the beginning of the month they've won their cause. The economic crisis, which has seen their clientele drop, was an argument in their favor. It went: lower the VAT and we can lower our prices. A study revealed by the French minister Patrick Devedjian, shows, however, that only 30 percent of independent restaurateurs and café owners have passed on the reduction by lowering prices.

The difference for the customer would come to 11.8 percent. Which means that, say, steak frites at a modest bistro will be about three dollars cheaper--roughly $30. Most restaurants that have lowered their prices have done so selectively. Nothing legally obliges a place to pass on the reduction to clients, but if it has an official sign that says "La TVA Baisse, Le Prix Aussi," it has to pass it on regarding at least 7 items.

For the rest, eat and bear it.

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Prices and other information were accurate at press time, but are subject to change. Please confirm details with individual establishments before planning your trip.

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