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ORIGINAL FRENCH ARTICLE: Les contre-propositions des députés PCF-PG

by Cyril Charon

French Pensions Reform Bill : the Left Front Deputies’ Counter-Proposal.

Translated Sunday 20 June 2010, by Isabelle Métral and reviewed by Henry Crapo

In opposition to the law to reform the retirement system, proposed by the Fillon government, the Communist deputies and their allies have offered an alternative proposition. What propositions, and with what philosophy? Our analysis.

The Communist Party and Left Party’s counter-proposal is motivated by the shared conviction that « only a fairer distribution of wealth between labour and capital, together with a high rate of qualified-employment, can effectively meet the point at issue, namely the financing of our system of welfare.” In order to keep the legal minimum retiring age at sixty, two possibilities - new taxes and higher tax rates on incomes - have their deputies’ preference and therefore appear in a variety of forms throughout the twelve provisions included in their bill.

Article one: “Companies’ financial income is subject to an old age insurance contribution at the rate of (…) 9.9%”

This new contribution would bring in an additional 30 billion euro or so. And so it is meant to ensure the quick financing of compulsory pension schemes and to incite companies to prioritize the labour factor, as article two does directly.

Article two: “Companies are subject to an additional old age contribution, the amount of which will depend on the evolution of the ratio of the company’s distribution of wealth in comparison with the evolution of the ratio of distribution of wealth in their economic sector.”

Thus companies that set financial returns above employment and wages will be penalized.

Article 3: “Companies of 20 employees and above with at least 20% of their payroll on part-time work will be subject to a ten percent increase in their employer’s contribution.”

Article 4: “Article L241-13 of the Social Security Code is repealed.”

Articles 3 and 4 consist in scrapping two central provisions in the government’s tax policy, namely the overall decrease in employers’ contributions on the one hand, and exemptions on taxes on overtime pay, on the other. The expected gain is about 25 billion euro.

Article 5: “Articles L241-17 and L241-18 of the social Security Code are repealed.”

At stake in this article is the basis on which social contributions are assessed. Since supplementary voluntary programs (recently on the increase) have a narrower base, which is “detrimental to the traditional forms of remuneration that are subject to the payment of social contributions", the Left Front proposes raising the rate for the overall social package to 20%, from 4%. This would bring in another 3.8 billion euro.

Articles 6 to 11 concern the higher incomes.

The six articles are aimed at significantly increasing the contribution rate for profit-sharing benefits or cloth cap schemes, stock-options, and traders’ bonuses.

Article 12: “Articles 1 and 1649-0 of the general tax code are repealed."

This article does away with the cap on the maximum amount of taxes a household can be made to pay in proportion to their income. This will bring in several hundred million euro.

The left Front’s ambition is no less than to ensure sound and enduring foundations for the system, not just to close a circumstantial gap.

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