Nicolas Sarkozy, France’s president, on Wednesday ran into his first big political storm since taking office over his government’s proposals dramatically to increase value added tax to fund the country’s costly social system.

Opposition Socialists and trade unionists seized on remarks by François Fillon, prime minister, that the government could raise VAT by 5 percentage points to 24.6 per cent as a means of shifting the burden of social charges from companies to consumers. Such an increase would put France near the top of Europe’s VAT league.