The President of French Polynesia announced on Tuesday the entry into force on April 1 of a tax on consumption, the Contribution for Solidarity (CPS).

The goal?

Save the local Social Security, in chronic deficit.

Inflation to be expected

“The sole objective is to save our generalized social protection, in other words to save all benefits such as health insurance, old-age pensions, family allowances, allowances for the disabled”, declared Edouard Fritch on Tuesday before the Assembly of French Polynesia.

According to trade unions and employers' organizations, this tax will cause high inflation.

The country divided

On March 17, about 2,000 Polynesians had demonstrated in Papeete against this tax, announced at 1.5% and applied at several stages of the import or processing of a product, with a significant additional cost for the end consumer.

After a meeting with the social partners on Tuesday, the government finally limited the tax rate to 1%.

The Medef against

Same opposition from the bosses: Medef Polynesia wanted a deductible social VAT, applicable only on the sale price to the consumer.

The employers' organization estimates that with a 1% tax on all intermediaries, inflation will exceed 3% over one year.

Its president Frédéric Dock also fears "a distortion between those who have long circuits, with intermediaries, and those who have short circuits: companies will reorganize and jobs will disappear".

"It's up to France to pay"

For the independence opposition, it was up to France to pay.

"We are bickering among ourselves to get between 6 and 9 billion Pacific francs (50 to 75 million euros) in the pockets of Polynesians", regretted the deputy Moetai Brotherson.

“I would have preferred that the government and the local assembly support my bill for the State to reimburse the 100 billion (838 million euros) that it owes to the Social Security Fund, since since 1977 all the costs related to radiation-induced diseases, caused by nuclear tests, have been borne by the Polynesians,” he underlined.

Miscellaneous facts

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  • Social Security

  • French Polynesia

  • Tax

  • Polynesia

  • Economy

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