French lower house of the parliament, the National Assembly, on Tuesday passed a bill with majority support on the creation of the so-called "social VAT," a schemed aimed to breathe life into the domestic job market and boost competitiveness.

A total of 301 deputies of the National Assembly voted for the tax scheme and 207 voted against.

The bill will now be decided by the Senate and then by the Constitutional Council before the upcoming presidential election.

If approved, the social VAT scheme would reduce labor costs by lowering payroll taxes and increasing VAT on added value.

French officials expected the new VAT to create up to 120,000 jobs. But trade unions and opposition parties denounced the "anti-social" measure, saying it would further stress ordinary citizens and fuel prices.