PARIS - BILLS in French restaurants and cafes are set to drop from Wednesday after the government slashes value-added tax for the restaurant business from 19.6 per cent to 5.5 per cent.

Big restaurant chains and many smaller restaurants have said they will lower their prices, with the cost of a traditional espresso coffee in many establishments set to go down from 1.2 euros (S$2.4) to one euro.

Lowering prices is not obligatory however under the new measure.

'More than 80 per cent of businesses are going to toe the line,' Didier Chenet, head of Synhorcat, a restaurant employers association, said on Tuesday.

Christine Pujol, head of another association, said there would be a 'strong mobilisation among restaurant owners' to cut prices in line with the tax cut.

'We have reviewed our whole menu,' Michelin Morin, head of Leon de Bruxelles, a chain of 50 restaurants specialising in mussels, told AFP.

France has campaigned for seven years to get the go-ahead from European Union partners to lower value-added tax for restaurants and cafes.

The measure will cost the French state 2.38 billion euros a year but owners have undertaken to employ 40,000 more people. -- AFP