reprinted from:

Visit the Boston Globe website


Tax has chefs hot under collar
French governments 20.6% VAT on restaurant meals stirs revolt
 

By Patricia Ochs, Globe Correspondent
Copyright 1999 Globe Newspaper Company
Article date: December 13, 1999
 

PARIS - Something is smoldering in the kitchen of Bernard Loiseau. It is the chef himself, fresh from a hot stove. This three-star general of French cuisine, the owner of La Cote D'Or in Saulieu, Burgundy, and of two bistros in Paris, is yelling into the telephone:

"The French government has to realize that tourists come to France for the cuisine," he says. "But we are damaging our heritage in return for easier access to fast food like McDonald's." He is one of many French chefs, great and small, who embody this nation's reputation at the summit of world cuisine. He is also at the forefront of a revolt against a 20.6 percent value added tax that is slapped on every meal served in a French restaurant.

The tax, protesters say, is putting France's culinary renown in peril.

In budget talks this fall, the government kept the tax at its current level. So the great chefs of France are, let's say, "flambeed."

It is bad enough to feel squeezed by the shortening of the workweek in 2002 to 35 hours, high social security taxes, and the ever-mounting costs of quality ingredients, they say. But the real sore point is that fast-food outlets such as McDonald's are enjoying a huge surge in popularity and pay a tax of only 5.5 percent.

On Oct. 11, about 2,500 chefs and restaurateurs took to the streets in Paris to press their point that the tax inequity had gone on long enough. Decked out in white toques and aprons, carrying placards demanding that the government reduce the tax and give them parity with fast-food outlets, they hurled eggs, flour, and a diverse assortment of vegetables at riot police.

In a nation numbed by strikes and slowdowns in almost every conceivable sector - from transportation workers to students angered by the lack of teachers and classroom space - the sight of Parisian chefs fleeing police tear gas struck a chord.

"I would have been there if I didn't have to cook," said Eric Schwyter, 37, a chef at Chez Rose as he posted his 80-franc ($13.30) lunch menu featuring terrine de foie gras and andouillettes. "In fact, I barely see my wife and children, but I spend lots of time watching my profit margin disappear.

"It's hard to watch McDonald's increase its volume and its cash flow, especially with an unfair tax advantage."

It is the "petits cafes," the home-style family bistros, and the bustling brasseries so attractive to the palate and the popular imagination that are especially endangered.

"Every year 4,000 French restaurants go bankrupt," said Andre Daguin, president of the Union des Metiers et des Industries de l'Hotellerie, which represents owners of 70,000 hotels, cafes, and restaurants across France.

"Many of them are the small ones that cannot sustain this tax burden," said Daguin, who helped organize the October protest.

Finance Ministry statistics back up Daguin's assertion. But more significantly, the numbers of fast-food and takeout businesses in France doubled from 6,500 in 1993 to 13,950 in 1998, according to the ministry. Add this to the shrinking revenues of the classic French restaurant, and it is easy to see why processed cheddar on a bun is taking the place of the venerable "plateau de fromage," or cheese board.

"The market is increasingly going to fast food because the price is infinitely lower," Daguin said.

From 1990 to 1999, the revenues of fast-food restaurants shot up 30 percent while traditional restaurants' incomes dropped 6.2 percent, according to the National Institute of Statistics and Economic Studies.

The Finance Ministry has blocked efforts to lower the tax to 10 or 12 percent, saying it would result in unacceptable revenue losses of nearly $3 billion a year.

"I can understand the restaurants' concerns," said Nina Mitz, a spokeswoman. "But fast food is take-away food and involves very little preparation. That's why it's taxed at a lower rate."

During the budget discussions for next year, the government, in keeping with new European Union regulations limiting reductions in the value added tax to two categories, selected housing renovations and services related to care for the elderly, not restaurants.

"We have to keep our priorities straight. We felt that would employ many more people, those with lower incomes," Mitz said.

"We work like beasts, and we don't have enough to live on," said the owner of a small family-run Right Bank bistro who wished to remain anonymous.

Daguin has vowed more demonstrations after the New Year on behalf of the 600,000 people employed in restaurants, who represent France's fourth biggest employment sector.

This time, he said, he will have the support of powerful farmers' unions, another force that wants to preserve "traditional France" against what he called the "global infusion of banal fast food."

"If the VAT remains this high, the haute cuisine restaurants will survive. The fast food places will thrive. But everything in between will eventually disappear," Daguin said.
 

In the News