Tuesday, November 18, 2014

Working poor: a premium of activity in 2016 but … – Les Echos

Working poor: a premium of activity in 2016 but … – Les Echos

In a few days, everything unlocked. The possible reform of aid to poor workers that the government stumbled past two years happen. A week after announcing the removal of the employment premium (EPP), a tax credit for low-income workers in the supplementary budget, Prime Minister, Manuel Valls, will announce Thursday the Cabinet contours of the new device.

From January 2016, a “premium business” will replace the PPE and RSA activity. Households will be eligible under a certain threshold is close to the minimum wage but not yet arrested revenues. Delivery will then be paid to individual members of the household working. The reform is designed to complement the income tax decrease, which comes into force next year, targeting the middle class. “The poorest households, which are not taxable, will not benefit from the tax cut, says it Matignon. There was no question of excluding these employees in the effort to improve purchasing power. ” New: younger than 25 years who were not eligible for RSA activity will be eligible for the “premium business” under conditions that remain to be defined.

The service will also be simplified. As requested by the National Family Allowance Fund, RSA activity and future device manager, the calculation of the benefit will be frozen every three months, as it evolves every month now.

The reform will be a constant budget, ie by taking all the funds allocated to the RSA activity (just under 2 billion euros) as well as economy generated by the removal of the PPE from 2016 (1.9 billion euros), totaling just under € 4 billion per year. “The EPP was frozen for several years, the amount decreases from 200 million a year, argues Matignon. This will be a priori not the case for the new benefit. ” The initial desire of the executive was yet to increase the dedicated budget.

The reform will therefore be losers, as shown by the various parliamentary reports on the subject. The executive takes this choice: “There were among the beneficiaries of PEP households from the middle classes, those not perceive the benefit. This will generate margins to a redistribution in the vicinity of the minimum wage. ”

Still defects RSA activity may remain, such as the very high rate of non-use. A lot of people will give up because of the cumbersome procedures or because they think they do not qualify. Some households may also be put off by a premium of only a few euros.

The removal of PPE will be voted this year to apply in 2016 because it is a tax credit. But the rest of the reform will be the subject of consultation with parliamentarians and the social partners. “You have to decide more precisely of the eligible population, income levels decide,” says one at Matignon. The floor will he secured around 0.3 times the minimum wage? The ceiling around 1.2 or 1.3 times the minimum wage? What will it be? What smoothing mechanism? Number of issues remain unresolved. The new “premium business” will be a text ad hoc law next year.


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