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French Government Wants to Increase VAT Rate of
Entrance Fees for all Theme Parks. Industry Protests
Last Wednesday, the French government announced its intention to raise the VAT rate of theme parks entrance fees from 5.5% to 19.6%. The entire profession is furious and stunned by a measure which should not bring more that 90 million euro to the state.
The government, through the voice of Prime Minister François Fillon, said to have made the decision to harmonize the taxation of outdoor activities, for which there was so far what he calls "a distortion of competition between several activities that have similar goals".
In fact, the entrance fees of theme parks, zoos, botanical gardens, museums, exhibitions or carnival rides are subject to a reduced VAT rate of 5.5%. Theme parks have been accepted at this reduced rate in the tax code in 1987, with the signing of the Euro Disney Convention, between the French state and The Walt Disney Company. A concession made especially for Disney that has been a help to theme parks developments in the country.
On the other hand, similar activities such as water parks, outdoor games and sports centers have remained the standard VAT rate of 19.6%. A difference that the government wants to lift now, but only for theme parks, the reduced rate said to be still applying to zoos, botanical gardens, museums or carnival rides.
If this proposal is voted in Parliament in September, it would deal a serious blow on the theme parks market, because they will be obliged to increase the rates of their entrance fees by 14 points (13.02%) in the fall.
If they take this increase dependent on them, the parks will suffer a decrease in operating results, leading to lower investment levels, or even worse ... to layoffs. And if they take only a portion of the increase dependent on them, we can expect a decrease in attendance due to rising of entrance fees. Indeed, French people are probably not ready to pay more for theme parks at the moment.
Last thursday, the National Union of Recreational, Amusement and Cultural Areas (SNELAC) communicated for the whole profession by describing the measure as "grossly unfair and discriminatory." A message relayed together by many parks operators and supported by lots of politicians, regional press and Internet sphere, including social networks and forums of enthusiasts.
"The consequences of this measure would be very severe, and most importantly, counterproductive. The suggested measure would deal a severe blow to the investment capacity of the profession, and to his force of economic development. The dynamics of investment would be deteriorated through the implementation of this proposal with its inevitable negative impact on employment. The theme parks industry is a major player in the tourism economy, which represents a turnover of 2 billion euros, 60 million visitors and 100 000 direct and indirect employment, which guarantees the constantly renewed hiring of many young people and employees in operational positions. Theme parks are the epitome of a local tourism, a family entertainment accessible to all, a possibility of escape and pleasure when you can not afford expensive vacation, as well as a leisure-oriented educational. "
The government measure is as surprising as the French theme parks industry behaves quite well compared to the economic crisis. If consumers reduced their spending on leisure, they have replaced long holidays abroad by short stays closer to home. This year, the attendance trend is positive for many theme parks including Futuroscope, Walibi, Disneyland Paris or regional parks such as Parc Touristique des Combes, Le PAL or Fraispertuis-City.
Many French theme parks have been set up by local authorities (Futuroscope, Vulcania, Bioscope, Puy du Fou, etc.). Political leaders of these local authorities have spoken against the measure, saying that the French government had never invested money for a lot of their projects. Some of these politicians are members of Parliament or the Senate and intend to kill the proposal during the debates.
Among the various reactions of theme parks leaders, some have been very clear:
Dominique Hummel , CEO of Futuroscope, indicates that if the park needs to support the increase of VAT, it would make 7 million euros less in revenues. It's the equivalent of a season of investments, or 240 jobs.
Philippe Gelis, owner of Nigloland, was ready to sign the purchase of a new rollercoaster. But the transaction is suspended for now, because if the law should be passed, the park could not fund the attraction.
Patrice Fleurent, owner of Fraispertuis City, said that supporting the increase in VAT, it would be a loss of 300,000 euros. The park would also have difficulties to finance its recent acquisition: the El Loco Coaster "Timber Drop".
The two most important players in the French industry, Euro Disney SCA (operator of Disneyland Paris) and Compagnie des Alpes (Parc Astérix, Walibi parks, Futuroscope, etc..) have called government to dialogue and have joined the SNELAC statements.
In view of these reactions and of the intense media offensive of some theme parks, there is no doubt that the government will respond shortly. The profession expects its reaction with anxiety and hope to be heard... because its future is now in balance...
Read more on our French pages:
Article 1 - With reactions of Snelac, Compagnie des Alpes, Futuroscope Puy du Fou and Walygator Parc.
Article 2 - With reactions of Disneyland Paris, Fraispertuis-City, Nigloland, Marineland, Le PAL and more.
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NewsParcs will do a full coverage of the IAAPA Attractions Expo 2013 in Orlando to have a look at the latest trends and developments of the global theme park industry.
