FRANCE WAS expected to become the first euro zone state to ratify the second Greek bailout after the National Assembly convened yesterday for a debate on the deal.
There is a broad political consensus in Paris in favour of contributing to the Greek rescue plan agreed in July. President Nicolas Sarkozy’s UMP party are firmly behind the deal, while the Socialist Party were expected to ease its passing by abstaining in the vote.
The Socialists favour the creation of eurobonds as part of the solution to the debt crisis and have criticised the package for Greece as too late and short of tools to spur growth. However, the party is keen not to undermine Greek prime minister George Papandreou, who leads the Socialists’ sister party in Athens. “We’ll abstain in order to say that we want solidarity with Greece, but that we want a different balance between growth and deficit reduction, and that we want to tackle the roots of the problem,” presidential contender Martine Aubry said.
A recent parliamentary report found that the latest Greek bailout would have a limited short-term impact on France’s finances, but that debt would rise by 2 per cent of GDP by 2014 as a result of aid for struggling euro zone members.
Separately, Mr Sarkozy’s attempt to enact a new austerity package met opposition within his own party yesterday, with the government forced to scrap a plan to triple tax on theme parks after an outcry from its deputies.
Determined to retain its cherished triple-A credit rating and reduce its large deficit, the government recalled parliament several weeks early yesterday for a debate on a package aimed at making €1 billion in immediate savings.
The initiative – part of a wider €12 billion austerity package for 2011-2012 – has exposed sharp divisions within the ruling UMP party and threatens to damage Mr Sarkozy just nine months before the presidential election.
Some 2,200 amendments were tabled yesterday, while a row within the UMP led to a climb-down on one of the most high-profile elements of the package even before the session began. The plan to triple VAT on entry tickets at 200 theme parks such as Disneyland and Parc Astérix, bringing them to the standard rate and netting an extra €90 million annually, was abandoned after a rebellion from deputies with theme parks in their constituencies.
Former prime minister Jean-Pierre Raffarin provoked Mr Sarkozy’s wrath by publicly branding the idea a “social error”, arguing that it would disproportionately affect poorer families who visited theme parks instead of taking holidays. The retreat over the “Mickey Mouse” tax, and plans to make up the shortfall by raising tax on luxury hotels, has dominated public debate on the austerity package.
A plan to introduce a tax for those who earn more than €500,000 a year has been challenged by the party’s leader in the National Assembly, Bernard Accoyer, for setting the threshold too high. He said €250,000 would be more appropriate.
The package also envisages cutting tax loopholes, ending credits for large companies and raising taxes on cigarettes and spirits.
