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FRANCE: Coca-Cola Co suspends investment on tax hike

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Coca Cola France has suspended a planned EUR17m (US$24m) investment in France following the government's decision to hike value added tax on added-sugar soft drinks. 

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Coca-Cola said today (8 September) that it may no longer install a new production line at its plant in Pennes-Mirabeau, near Marseille. “This investment has not been cancelled but is being re-evaluated within the uncertain context created by this tax,” the company said.

At the end of last month, the French government announced that VAT on soft drinks with added sugar will rise from 5.5% to 19.6% from 1 January 2012. The move will generate EUR120m of revenue, ministers estimate.

In apparent protest, Coca Cola has also cancelled 40th anniversary celebrations of the Pennes-Mirabeau plant, scheduled for 19 September. Coca Cola Enterprises (CCE) president, John Brock, was set  to attend. 

In August, analysts said that CCE might have to cut costs in France following the tax decision.

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