12 Jul 2013

French Polynesia to adopt fiscal reform and hike taxes

4:59 pm on 12 July 2013

French Polynesia's assembly is poised to adopt a fiscal reform on Saturday before the president Gaston Flosse flies to Paris next week.

However, the publisher of the Tahiti-Pacifique monthly, Alex du Prel, told Walter Zweifel the package is unlikely to revive the economy.

ALEX DU PREL: They haven't touched the main problem, which is the pay of the government employees, which is totally out of proportion with the revenues of the territory. And they've only increased taxes. For example, our tourism has dramatically dropped because we're too expensive, and yet they're putting new taxes on alcohol, that means wine, beer and everything, and putting new taxes on services, which all the tourist industry is, and so on. It's just the old thing. We just add taxes on top of taxes and everything, and we're just going to remain the most expensive destination in the world.

WALTER ZWEIFEL: How significant is French input to maintain the system and to get these reforms passed?

ADP: Under the previous government, under Mr Temaru, France always has said by sending over Anne Bolliet and being under the former presidency and the new one, that means between Sarkozy and Hollande, take care of your problem, lower your expenses, reform your tax system and we will help you. So we had the big show over here, the media show, and actually it's to prepare for Mr Flosse's visit to Paris. And don't forget these new taxes and everything are supposed to start on 1 August and 1 October. Mr Flosse is going there on 15 July. And he's going to arrive in Paris and say, 'Look, I've done what you wanted' and everything, so they shout more money for us. But the main problem is the public sector hasn't been touched at all.

WZ: You've been pessimistic about French Polynesia's economy for a long time, but it keeps ticking over, money keeps coming from France. How long can that last?

ADP: It will last as long as France is willing to pay. The problem is, for example, will announce a big plan which is supposed to last 15 years, to boost the economy and create new jobs. And that plan is going to cost 15 billion euros. Yet Tahiti, over a 15-year period, cost 20 billion euros. Because right now we're eating up 1.5 billion euros per year that France pays. But over here nobody wants to change the system. One time there was a discussion that they might lower by 10% all public wages. And immediately one of the unions made a big meeting in front, so it disappeared. Because over here we only have strikes by the rich people.