PARIS Nov 14 France's finance minister appealed
to retailers' better instincts on Thursday, urging them not to
pass on a rise in sales tax to shoppers in January as public
frustration grows over a tax-heavy 2014 budget.
Following violent anti-tax protests in western France,
Pierre Moscovici said he would not abandon plans to raise value
added tax by 0.4 percent on Jan. 1.
But he would ask retail chains - already struggling with
smaller margins than some of their European peers - not to raise
"Nobody has to reflect this (VAT hike) in their prices," he
told RTL radio. "I think it's important to show virtuous
behaviour, notably in the retail sector which along with the
French people must display a civic spirit."
High labour costs have squeezed margins for French retailers
including Carrefour, Leclerc and Casino,
stoking criticism from business leaders who say President
Francois Hollande's tax increase will unfairly penalize them.
Ratings agency S&P echoed the criticism when it downgraded
French debt to AA+ to AA last week, citing insufficient efforts
to reduce public spending and implement structural reform.
The retailers were not immediately available for comment on
The Socialist government has promised to stop raising taxes
once the 2014 increases - which also include a new 75 percent
top rate of income tax and higher corporate taxes - have taken
But unease about an economy that slipped back into negative
territory in the third quarter has dragged
Hollande's approval rating to a record low of 15 percent,
according to a Yougov survey published on Thursday.
The government indefinitely suspended a planned tax on heavy
road transport following violent protests by "red bonnet"
activists in western France, its latest reversal after it
backtracked on plans for two other taxes.
In a report to the government dated Oct. 25, regional
prefects described French society as "increasingly tense,
exasperated and angry" with much of the anger focused on tax
increases, Le Figaro reported this week, citing a leaked copy.
Inflation in France slowed to its lowest rate in nearly four
years in October, mirroring developments across the euro zone
that unexpectedly led the European Central Bank to cut interest
rates last week.
(Reporting By Nicholas Vinocur; Editing by John Stonestreet)