€65 billion austerity drive
President Nicolas Sarkozy has introduced a €65 billion austerity drive which will include tax hikes and budget cuts over the next five years.
The new measures which were announced by Prime Minister Francois Fillon include a rise in basic VAT from 5.5% to 7%, hitting many services including restaurants. There will be a five percent increase in the profit tax for companies earning €250 million in sales per annum. The retirement age will also be accelerated from 60 to 62 by 2017 not 2018 as before.
An increase of 5% will also be placed on dividend tax, increased taxation of buy-to-let property investments as well as more withdrawal on tax breaks in other areas.
President Sarkozy faces an election in April next year with Socialist candidate Francois Hollande well ahead in the polls.