France to raise VAT to help fund industry credits

PARIS Tue Nov 6, 2012 5:33am EST

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PARIS Nov 6 (Reuters) - The French government said on Tuesday it will seek 10 billion euros through increased sales taxes and prune public spending by the same amount to fund 20 billion euros ($25.6 billion) in tax credits for companies that keep jobs in France.

The measures are the Socialist government's response to a review of the country's ailing competitivness by industrialist Louis Gallois that urged major cuts to payroll taxes.

Small increases to value-added sales tax, including a rise in the main rate to 20 percent from 19.6 percent, will take effect from Jan. 1, 2014, while the tax credits will be available from next year, according to details released to the media.

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