Exposing the real fraud behind 'welfare-dependent France'

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Welfare fraud is a subject never far from the covers of the French weeklies. A recent issue of Le Point headlined 'Those that are ruining France" (photo left), in an article denouncing "healthcare crooks".

The stories mostly centre on unemployment benefit fraud, of subsistence benefit fraud, of healthcare benefit fraud, sometimes on an organised scale. There are several per month. When, in the midst of last year's debate on wearing the burqa in public, then- interior minister, Brice Hortefeux himself denounced the case of Lies Hebbadj who, according to daily Le Figaro, had four wives, 17 children and had accumulated 175,000 euros in benefits over three years, it was bound to make the top story.

Several MPs of the ruling conservative UMP party announced in early March that they were proposing a bill that would allow RSA beneficiaries to be monitored without warning and would require the creation of "a social pass on which all benefits received by the card-holder would be listed".

Obviously welfare fraud does exist. Jean-Pierre Door, UMP MP for the Loiret, in north-central France, evaluates it at 15 billion euros. But this is just a guess; no-one knows the real cost.

At the national Office for Family Allowances, which distributes 60 billion euros annually, fraud is evaluated at between 540 million euros and 808 million euros per year, 88% of which is recovered over three years. In the Pension Plan, fraud is estimated at 25 million euros per year, not counting organised scams which are more costly, especially over long careers. The French national audit office (la Cour des comptes) estimates the Job Centre reorganisation fiasco cost 2 million euros. But the fraud figures are probably underestimated according to a 2008 report by the Council for Strategic Analysis which advises the Prime Minister. "We should create a welfare benefits police, to stop the actions of the small minority that abuse the system," suggested Olivier Ferrand.

But welfare recipients are not the only ones to engage in defrauding the state. MP Jean-Pierre Door admits that most of the health care fraud is due to "unnecessary medical care". A high-ranking official at the Ministry of Finance noted that "the government tends to focus on benefits, but there are enormous stakes, and perhaps even greater health benefit fraud perpetrated by doctors, hospitals or [private] clinics," all of which are part of the conservative right's traditional electorate.

The national audit office estimates tax and welfare fraud totals, at least , between 29 billion and 40 billion euros annually. That represents between 1.7% and 2.3 % of annual GDP. Undeclared work, or moonlighting, costs the State between 6 billion and 12 billion euros per year in lost income from employer and employee contributions.

But what costs public finances most is tax fraud. This is estimated at 4.3 billion concerning lost income tax, 4.6 billion concerning lost corporate tax and between 7.3 billion and 12.4 billion in lost Value Added Tax. That does not include the numerous loopholes and legal tricks for avoiding paying taxes, both among individuals and corporations. But fraud in those areas does not appear to concern those MPs' busy with proposing tougher legislation with which to target the poor.

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English version: Patricia Brett

(Editing by Graham Tearse)

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