French government considers again tourism as a cash cow

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PARIS, France (eTN) – As the French economy is bracing for weak growth or even a recession, the government is confronted with a fall of its revenues and its inability to cut the state’s deficit. Any idea to pump up money seems good, and tourism is – as usual – is seen as an easy money-spinner to fill up treasury coffers.

The French government first mulled out the great idea to increase VAT on entertainment parks, raising it from its current 5.5% to 19.6%. The measure was to bring in € 90 million (US$117 million). But protests from local politicians – including a former Prime Minister – forced the French government to back down and finally abandon the idea. Then came the second thought of imposing a 2% tax on luxury hotels.

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The new taxation is especially rejected by all professionals in the hotel and tourism industry as it follows a recent re-classification of French hotels by the France Ministry of Tourism. In the past, excessive taxation for luxury properties – especially five-star hotels – was bypassed by hoteliers by downgrading their classification. France was then among the few countries around the world without five-star hotels but “four-star deluxe” properties! The recent upgrading of hotels to four- and five-star properties had been achieved to reflect their real standards of comfort and services and attract a more affluent crowd of foreign travelers. Atout France (France’s tourism promotion agency) Managing Director Christian Mantéi was the first to condemn the new taxation. In a local hotel magazine, Mantéi indicated feeling worried that the new 2% tax would stop the recovery of international markets towards the luxury hotel segment.

Adopted yesterday in Parliament, the new tax will finally affect all hotels with prices over € 200. Instead of being taxed at 5.5%, rooms – excluding breakfast – will now be taxed at the new rate of 7.5%. And as a bad surprise for travelers, it will enter into application from November 1, 2011. Unfortunately, the French government does what most governments think about tourism around the world: it is easier to tax visitors as they do not represent a potential voter’s force.

Juergen Thomas Steinmetz has continuously worked in the travel and tourism industry since he was a teenager in Germany (1979), beginning as a travel agent up through today as a publisher of eTurboNews (eTN), one of the world’s most influential and most-read travel and tourism publications. He is also Chairman of ICTP. His experiences include working and collaborating with various national tourism offices and non-governmental organizations, as well as private and non-profit organizations, and in planning, implementing, and quality control of a range of travel and tourism-related activities and programs, including tourism policies and legislation. His major strengths include a vast knowledge of travel and tourism from the point of view of a successful private enterprise owner, superb networking skills, strong leadership, excellent communication skills, strong team player, attention to detail, dutiful respect for compliance in all regulated environments, and advisory skills in both political and non-political arenas with respect to tourism programs, policies, and legislation. He has a thorough knowledge of current industry practices and trends and is a computer and Internet junkie.