France: CESE Rejects Tax On Indemnity Payments

by Ulrika Lomas, Tax-News.com, Brussels

15 October 2009

Presenting its recommendations to Bernard Accoyer, the President of the French National Assembly, France’s Economic and Social Council (le Conseil économique, social et environnemental (CESE)) has called for the government to abandon its plans to introduce a tax on the daily compensation paid out to those who have suffered an accident at work.

Eager to introduce the measure in the 2010 budget, the president of the parliamentary group Union for a Popular Movement (l’Union pour un Mouvement Populaire – UMP) Jean-François Copé has emphasized that the proposal could serve to generate in the region of EUR150m.

Despite receiving full support both from President Nicolas Sarkozy and from the government, the highly controversial proposal has, however, sparked outrage from the unions, and aroused fierce opposition from members of the UMP.

Aware of the need to redress the balance of the public finances, the Council nevertheless concluded that the introduction of the tax could only take place within the framework of a fundamental reform of the country’s existing system of taxation.

According to the CESE, compensation paid out for job-related accidents should be treated in exactly the same way as other forms of compensation, such as that paid out to road accident victims. It also emphasized that to impose a tax on compensation for work-related accidents would be to further penalize workers, already deprived of pension rights, and for whom compensation is capped at 60% of salary.

In conclusion, the Council urged the government to abandon its plans at the current time, in order to prevent unnecessary social unrest for, what it considered, very limited gain.

Recommended