July 4, 2022

Inflation allowance of 100 euros: why the Senate says no and what will change

The inflation compensation must concern 38 million French people (©Marc Roche / Adobestock )

Too “expensive”, “not sufficiently targeted” and an implementation that “questions”. Wednesday November 17, 2021, the Senate has withdrawn the inflation allowance of 100 euros, a measure wanted by the government to help the poorest households in this period of rising prices, in particular those of fuels.

Senators do not want this device, at least not in this form. We take stock of the reasons for this choice and what could change for the 38 million French people affected by this exceptional aid.

Why does the Senate have a say?

When a law is examined by our Parliament, it is first examined by the National Assembly, the lower house. As part of what is called the “parliamentary shuttle”, it is then studied by the upper room, the Senate. Before returning to the National Assembly, who will always have the last word.

The Senate is dominated by Republicans, while the other chamber has a presidential majority. So it makes sense (and often is) that bills, voted for the first time by the deputies, be rejected by the senators.

The 2022 finance bill, in which the inflation allowance is found, was validated by the National Assembly on Tuesday, November 16, with 348 votes in favor, 205 votes against and eight abstentions.

It is therefore almost no surprise that it was retoked two days later by the senators.

Why are senators against it?

Through the voice of Jean-François Husson, LR general rapporteur in the Senate, the majority rejected the measure, deeming it too expensive in the context of debt and public deficit, which in 2021 would reach “the historic level of 205.2 billion euros”.

According to the Senate, the inflation compensation will come strongly increase public spending. The device, which should benefit more than 38 million people, would represent a cost for the State of 3.85 billion euros, according to a calculation by parliamentarians.

The latter deplore four points.

First of all, “insufficient targeting”, at the risk of “massive threshold effects”.

Schematically, a single parent with one or more dependent children and receiving 2,100 euros net per month will not be eligible for assistance, unlike a person receiving 1,900 euros, but living as a couple without children with a spouse with much higher income.

Senate report

All French people who meet the means test are affected by the aid, “regardless of their actual exposure to rising fuel prices”.

An urban user of public transport would receive the same inflation compensation as a rural person using his car twice a day, five days a week, to get to work.

Senate report
  • Implementation by companies

Senators then regret that companies are involved, by paying aid directly before being reimbursed by the State: “they are not intended to advance social assistance schemes paid to employees. “

  • An inappropriate political signal

What will happen in the event of persistence of current inflation and future pressures on prices, ask parliamentarians. They fear “A form of ‘habituation’ to recourse to public spending ‘whatever it costs’, developed in the context of the crisis ”.

What do they offer in return?

The Senate therefore proposes to replace this inflation premium by “a punctual strengthening of existing and better targeted systems”, and adopted two amendments to this effect.

This measure would result in:

  • A exceptional increase of 150 euros in the activity bonus ;
  • A exceptional allowance of 150 euros for recipients of social minima and social benefits;
  • A additional endowment intended for mobility aids paid on a case-by-case basis to the unemployed and young people on the path to integration.

This system would concern 4.5 million households, i.e. nearly 9 million people, and would represent an expense of 1.5 billion euros.

Does the text have a chance to be validated?

It is unlikely. As indicated by Olivier Dussopt, Minister responsible for Public Accounts, the “presidential majority will restore this provision of support to the French”.

Gabriel Attal, government spokesperson, went in the same direction on the morning of November 18, assuring that “the National Assembly will have the last word”.

What will happen next?

The final timetable is not yet known, but the National Assembly must again consider from Monday 22 November the amending budget. In the event of disagreement on a text between the two chambers, a joint committee is set up. Made up of seven deputies and seven senators, “it aims to achieve the conciliation of the two assemblies ”.

If no agreement is found, the text leaves by shuttle and it is the National Assembly which will have the last word.

It is also possible that the Constitutional Council is entered subsequently, and decides whether or not to censor a text. And finally, the law is promulgated by the President of the Republic, for implementation.

The inflation allowance must be paid from December. The promulgation will therefore have to be made in the coming weeks.

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