French go at it, but will it generate much-needed tourism boost?

PARIS (eTN) – As France international tourist arrivals take a dive, the French government adopted over the summer two new laws that could theoretically benefit to tourism. “Theoretically” only as French like to play around or against rules. Incivility would then jeopardize the expected positive effects of both new laws.

Already in effect 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, which is an objective of the French government for the last five years, early this year. An agreement signed at the end of April between the government and the association of hotels, restaurants and cafes stipulated that the profession would create in return new jobs and also lower prices by 11.8 percent on seven menus or food and beverage items such as coffee, mineral water, day special, etc.

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 integrally 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 before to eventually take tougher steps. However, it might be difficult for the government to control the situation. The agreement signed between the government and the association of hotels, restaurants and cafes stipulates that price reductions have no compulsory character.

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 now be able to see any 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 twice the rate they are during the week, as it was usual until now for Sunday work. 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.