RSA beneficiaries to be taxed 30 per cent on aid
Beneficiaries of the much-maligned social aid Revenu Solidarité Active (RSA), that has become a thorn in the side of the Collectivité due to its exorbitant cost will see a 30 per cent flat rate levy deducted from their compensation as of January 1, 2015. It applies to the RSA “Socle,” a base- rate category of 3, 833 persons who have no professional income. Those in the RSA “Activité” category (some part-time income) are not taxed.
The measure amounts to an estimated saving for the Collectivité of 4.4 million euros per year, added to the 3.4 million euros compensated by the State each year. However, it still has to be approved by the Control de Legalité before it can be implemented.
In June this year, the Council voted for a reform of the RSA, a national social benefit, to make it more adaptable and affordable to St. Martin, but it is a long process. The reform will be done either by a law or decree authorising the Collectivité to take the measures changing how RSA can be applied for.
The State benefit assists persons who can prove they do not have enough money to live on. About nine per cent of the population claims RSA benefits, but it is a system open to abuse.
“We know for a fact that some people genuinely need the RSA because of their circumstances, but there are others who are claiming and working on the Dutch side, or sometimes they go back to their country to work, Santo Domingo for example, and some even have a business while still claiming,” commented President Aline Hanson, who added Mayotte pays 50 per cent less RSA than France.
The number of beneficiaries claiming RSA rose by 80.7 per cent between 2010 and 2013, and now costs the Collectivité over 16 million euros per year (1.4 million euros per month) draining the operating budget and impeding economic development that could be done in other areas.
RSA accounts for 60 per cent of social expenses and 12 per cent of the Collectivité’s total operating budget.
The RSA measure was voted 16 for, to three against and two abstentions.
Opposition Leader Daniel Gibbs was in Paris for Parliament’s vote on the Overseas Budget 2015, but in a pre-emptive release ahead of the Council meeting he indicated the tax “means a single mother with two children receiving 1,000 euros gross monthly will now get 700 euros.
“Why must 4,000 households with no other resources than the RSA pay for the fraudsters?” he questioned. “Rather than taxing recipients of RSA, is it not better to set up a political control with cooperation of the Dutch side. The President argues the system is a failure because it does not encourage people to return to work, but where are the jobs? How are jobs going to be created on an island in crisis?”
Gibbs said this levy on the RSA is “socially dangerous and unfair” and falls under “legal absurdity.”
Also voted through by the majority was an increase in the gasoline tax, from 0.6 euros cents to 0.12 euro cents per litre applied to the importers. This increase is expected to bring in an extra 1.7 million euros per year. It was noted the Dutch side has a far higher tax rate on gasoline, the equivalent of 22 euro cents per litre.
“There is no doubt gasoline is coming in from places like the Virgin Islands or South America and the importers and distributors are enjoying large profit margins,” Hanson said. “There are places where you can get gas anywhere from 0.96 euro cents per litre to 1.25euro cents so we know something is going on there.”
She added the tax increases were obligatory on the part of the Collectivité in order to conform to the terms laid out to pay back the loan from the Agence Française de Développement (AFD).
The third tax measure voted on was the turnover tax, Taxe Générale sur le Chiffres d’Affaires (TGCA). This was not an increase per se, but rather an extension of the tax to all service providers which was not the case before.
Businesses in the commerce sector such as supermarkets, clothing stores, boutiques, jewellery stores that were paying two per cent TGCA will now have to pay four per cent as of January 1, 2015. Revenue from this measure is expected to reap 2.7 million euros for the Collectivité.
The Council meeting was marked by several absentees; five from the majority party and four from the Opposition; however, their votes were cast by proxy.