No, You Can’t Opt Out of French Social Charges
As the red-capped tax revolt rumbles on there is at least one group French authorities are watching very closely indeed – small businessmen gathered behind the too-closely-shorn-sheep protest.
While Ras-le-bol (fed-up) has become one of the most widely-used headline catchphrases in France today, tax revolt groups are uniting under a national protest banner — the CNMP – Coordination Nationale des Mouvements de Protestation and social media are buzzing with ongoing anti-government agitation.
Some three months ahead of nationwide local elections — expected to see a large protest vote punishing the government — the Breton-led Red Bonnet revolt appears a long way from resolution. Even though PM Jean-Marc Ayrault dashed off in a blaze of media publicity December 13 to deliver a two billion euro aid and loans package to the region – the Pacte d’avenir — critics were soon making clear it was a less-than-generous effort at bribing the Bretons in revolt.
L’Express for instance reports that the ecomouv protest has not been placated by the suspension of the tax. It says government is negotiating with the toll consortium to extend its 11.6 year concession by way of compensation for the delay in introducing the tax. Meanwhile whether the truck tax is introduced or not, government must, contractually, pay the concession holder a rent of 45 million euros a quarter for the infrastructure erected along French roads to collect the tolls.
One sign of continuing discontent is the noise still heard on social networks. A cursory Google search turned up around 30 Facebook accounts dedicated to campaigns to oust the unpopular Socialist head of state who still has four years of his term left. On Twitter hashtags such as #HollandeDémission and #bonnetsrouges bring up hundreds of tweets from those for and against demands for the President to go.
As French News Online reported earlier, the level of exasperation and despair is growing. Here is what Jean Lassalle, MP for the Pyrénées-Atlantiques region in southwest France found. He and some of his colleagues stumped the country over the summer to sound out La France Profonde — read their eye-opening report here.
The discontent is largely due to the crisis-without-end that has plagued France and the world economy for six years now since the Global Financial Crisis trashed millions of lives and helped banksters win a massive tax free casino payout while playing their too-big-to-fail, get-out-of-jail card, at the expense of taxpayers worldwide.
According to the online liberal magazine Contrepoints which has been following the widening dissent closely, two groups in particular are causing alarums and excursions at the Ministry of Finance and the Inland Revenue Department.
These are Les Tondus (the close-shaved) which claims to speak for “thousands” of micro and small enterprises — and is leading a strike against paying part of the social charges — and Mouvement pour la libération de la protection sociale (MLPS), which is fighting to get the state to accept that EU insurance directives have effectively ended the “monopoly” on social security currently held by the state-run Sécu (in reality groups of mutual insurers brought together under the banner of la Sécurité Sociale).
Agnès Laurent writing in L’Express December 12 highlighted the travails she says plague many micro businesses trying to deal with la Sécu. “When I come home from work to find a letter from RSI – Régime social des indépendants, I know the rest of my evening is ruined” says one artisan she cites to illustrate the recurring problems many have reported with a social security system whose computers appear to suffer multiple attacks of data indigestion.
Didier Fillon co-founder of Les Tondus told Contribuables Associés, an organisation set up 23 years ago to demand lower taxation, that “10 per cent of small firms no longer pay the employers’ portion of the social charges”.
“We (the chain of sex saunas he and his business partner Guillaume Thomas run) stopped paying the employer portion of the social charges three months ago and we announced this to the media. We received thousands of telephone calls from small firms all worried about the spiraling cost of hiring staff and running their firms. As a result today 370,000 small firms, 69,700 in October when Le Figaro carried this report) no longer pay the employers portion of the social charges — that is more than 10% of the businesses in France — something never seen before,” he said.
The video clip in which he makes these claims is below. The claims have been repeated by mainstream media (see Figaro among others above) but there do not appear to be any reports in which government acknowledges the revenue strike. The clip also gives no account of official reaction to what, if the claims are correct, represents a significant challenge to state authority as a revenue collector.
This clip shows Didier Fillon telling Contribuables Associés about the Tondus efforts:
Meanwhile the campaign to allow individuals to pull-out of the state social security scheme — medical care, unemployment benefits, family and childcare benefit and pensions — and select their own package of cover from private insurance, pension and medicare providers is led by Dr Claude Reichman, president of the Movement for the Liberation of Social Protection (SPLM). This dental surgeon has spent 20 years demanding France “fully implement” EU directives which freed up the insurance (and other) sectors.
He claims these directives mean that private individuals have a choice between paying into the state system or going private.
Defenders of the going-private campaign say workers benefit by being paid their full salary and then shopping around for themselves to find the best deals on medicare, unemployment, pensions, and other benefits. This cover, SPLM claims, will always be cheaper in a competitive private sector market. In turn this helps the economy by freeing up more disposable income and boosting private savings.
However as the latest tax protests have burgeoned and President François Hollande’s popularity has plunged, the government is fighting back forcefully to ensure these two movements do not erode very important revenue sources for France’s world-renowned medical care and social security systems.
An article published December 1 on the leftwing news site Rue 89 and written by Adrien Renaud, a Health Economist, carries the firm headline: “No, Social Security Charges are not Optional”.
The article includes a strong warning to protest groups and the media: propagate this ‘myth’ at your peril: “Ceux qui aident ou incitent les assurés à se désaffilier, ou ceux qui proposent des contrat concurrençant des prestations entrant dans le champ de compétences de la sécurité sociale sont également passibles de poursuites”. (Those who assist or encourage policyholders to opt out, or those offering competing service contracts falling within the scope of competence of social security are also liable to prosecution).
Adrien Renaud writes: “The monopoly on Social Security was repealed by Brussels. Outright. Just as it was for electricity and telecommunications supply. Everyone is now free to take out the (social security) insurance cover they judge adequate and stop paying contributions for health insurance, or pension insurance. Neither do they have to pay CSG (Contribution sociale généralisée, a tax that funds social security) nor the CRDS (Contribution pour le remboursement de la dette sociale, amortising the social security deficit). This at least is what is being widely reported on internet sites by those who believe they have finally destroyed a bastion of militant collectivism.
“On October 25, (the liberal website magazine) Contrepoints trumpeted: ‘The French do not know it yet but the Soviet model has been defeated’. On November 3, Atlantico (a news platform written by dozens of volunteers with news and views to promote) published an article by Claude Reichman , president of the Liberation of Social Protection Movement (LSPM), which welcomed a judgment from the Court of Justice of the European Union delivered on 3 October. According to him, this puts an end to an intolerable ‘French exception’.
“Last weekend, it was Le Monde’s turn to present a portrait of a dermatologist (Note: Wikipedia describes him as a dental surgeon) who stifled by social charges, decided to quit the social security system. The issue is a long-standing saw in ultra-liberal circles. Claude Reichman and the LSPM have battled for 20 years to end the Social Security monopoly. The movement claims to attract many supporters and to receive over 500 inquiries per month. Websites like Securitesociale.info or Libreassurancemaladie.eu provide kits and information on how to ‘liberate’ Social Security…
“In 1992, two Council Directives (Directive 92/49/EEC and Directive 92/96/EEC ) ushered in, according to these campaigners, the right to choose social security insurance from other providers. France transposed these texts into French law in 2001, and, they say, has since then been in contravention of the law by maintaining the Social Security monopoly.
“Reached by telephone, Reichman denounced a ‘conspiracy against the French law’ and a ‘betrayal of the rule of law.’ According to him, ‘énarques’ (France’s senior administrative corps) have ganged-up to conceal the fact that the French have the freedom to choose their insurance provider. The situation had become intolerable, and ‘it has taken the Court [of Justice of the European Union] to demonstrate its disapproval (to get anything changed)’ he added…
“But those who hope to save money on their premiums should not rejoice too quickly. The Department of Social Security and the Department of Health have confirmed the legality of existing arrangements: ‘The obligation to affiliate to the French social security schemes by any business carried out in France is fully in line with EU rules,’ they say.
“Indeed, there is a catch. Reichman and his supporters forget one detail: the guidelines in 1992, and thus the basis which Reichman is claiming they purport to give everyone the freedom to choose their own welfare insurance, effectively exclude from their scope and application the insurance systems provided by a statutory system of social security’ (refer to directives 73/239/EEC and 79/267/EEC ).
“It is true that European legislation does not clearly define what a statutory system of social security is. But the law leaves no doubt at all that the French system is not covered by the two insurance directives.
Christian Poucet and Daniel Pistre, two Frenchmen who insisted they were free to choose their social security insurance provider, learnt this to their cost in 1993. The Luxembourg Court ruled that their application was illegal and the Court ruled that ‘Community law does not affect the competence of Member States to organize their social security systems.’
“On each occasion that the issue of a monopoly was put to the Luxembourg Court, it has upheld the freedom of Member States to organize their social security systems as they see fit.
“The 3 October judgment by the ECJ has not changed the law. It simply states that the German regime, which had issued misleading information to its policyholders, was wrong under Directive 2005/29/EC on unfair commercial practices.
“As lawyer RémyPhilippot noted on Juritravail.com, this decision says nothing about the competitive activities of Social Security systems or otherwise, and does not change their exclusion from the scope of Directives 92 / 49/CEE and 92/96/EEC . The social security monopoly has thus not been removed.
“The Department of Social Security does not provide any figures about the size of the ‘liberation’ movement. But it reminds readers that criminal proceedings may be initiated against those who refuse to contribute to the compulsory social security system. Those who assist or encourage policyholders to opt out, or those that offer competing services contract falling within the scope of the competence of social security are also liable to prosecution,” the report concludes.
With the French public-sector bill representing 57% per cent of GDP, highest in the euro zone, it was hardly by co-incidence that Reuters December 15 reported a call by Mario Draghi, President of the European Central Bank (ECB) for France to pursue economic reforms. “France must pursue economic reforms to redress its flagging competitiveness and can no longer rely on raising taxes to shore up public finances, as companies need fiscal stability to invest, European Central Bank President Mario Draghi said.”
In 2013, 62,500 French companies filed for bankruptcy or protection from their creditors while according to Le Monde, government introduced 84 new taxes worth €41 billion in additional revenue in the year after Hollande came to power.
According to the Irish Times: “Government spending went from 52 per cent to 57 per cent of GDP in five years,” says Denis Payre, a technology multimillionaire who recently founded a party, We Citizens, to demand government reform. “That’s €120 billion in extra spending,” Payre says.
The French have a reputation for easily embracing despondency, but the nation’s gloom as Christmas 2013 approaches, seems to many, to be deeper than it has been for many a decade, amid few signs that there is a pilot at the controls of the French Airbus.
Story: Ken Pottinger
- Bonnets Rouges Show Hollande the Red Card (french-news-online.com)
- Is Hollande’s France in Chaos? (french-news-online.com)
- To Tax or Not to Tax – Hollande’s Dilemma (french-news-online.com)
- Professional classes join French tax revolt (irishtimes.com)
- People power! France to postpone contested new truck tax by six months – tax revolt spreads (sott.net)