taxes - unemployment

New French tax to raise 1.4 bn euros for the unemployed

Wednesday 27 August 2008

A 1% tax on capital revenue in France is expected to raise 1.4 bn euros for a new government aid plan for the unemployed. (Photo: French President Nicolas Sarkozy with Martin Hirsch, in charge of the aid programme)

Budget minister Eric Woerth confirmed on Wednesday that the move was a “serious possibility”.

In a move to combat France’s stagnating purchasing power and encourage the unemployed to seek part-time work, the RSA, already implemented on an experimental basis in certain French regions since May 2007, seeks to provide an alternative to existing French government aid programmes like the RMI (aid for the unemployed), the PPE (aid for those employed with low salaries) and the API (aid for single-parent families). Martin Hirsch, former President of Emmaus France (French branch of Emmaus International, international organisation for helping the poor), is in charge of devising and implementing the RSA programme.

The government hopes to generalise the RSA plan by mid-2009, which, in the long run, could completely replace the three existing aid programmes mentioned above.

Encouraging part-time work for the unemployed

The new aid program aims to help both the unemployed and poor workers.

In previously existing aid programmes in France, it would sometimes be more lucrative for an unemployed person to stay unemployed and receive government aid rather than to work part time. The new RSA programme, on the other hand, provides for complementary aid for those working part-time. Les Echos cites the hypothetical example of an unemployed person who receives 450 euros a month as government aid (RMI). If he or she were to find a part time job at the minimum legal salary (500 euros), the RSA aid programme would complement this revenue with 62% of the salary perceived (310 euros). The total revenue earned (salary + RSA aid) would thus be 760 euros.