With the fall of its government, New Caledonia was only able to adopt two of the three tax reforms requested by the State, and therefore sees part of the promised emergency financial aid suspended from the vote on this third reform.
Originally, the memorandum of understanding signed between the South Pacific territory and the government provided for the payment of 231 million euros, on the condition that New Caledonia adopts three tax reforms before December 31: the creation of one day of waiting in the event of sick leave in the public service, the increase in the Caledonian solidarity contribution and the increase in the general consumption tax (TGC, equivalent of VAT).
The first two measures were adopted without difficulty on Monday December 23, but the fall of the government of independentist Louis Mapou on Tuesday blocked the rest of the voting process. As a sign of solidarity in the face of what Mr. Mapou described as “dirty political move”the elected independence representatives of the Congress (deliberative assembly) refused to sit on Thursday, leading to the postponement of the examination of the text on the TGC. Several non-independence local elected officials were then concerned about a risk of non-payment of aid which, according to them, could “lead to the placing under supervision of Caledonian communities”.
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In a joint letter distributed on Saturday evening and consulted by Agence France-Presse (AFP), the Prime Minister, François Bayrou, and the Minister for Overseas Territories, Manuel Valls, confirmed that a “strict application of the memorandum of understanding should have led to the payment being called into question”. But, they add, faced with the imminent risk of stopping public services and social assistance, the government has decided, “considering that two of the three required conditionalities had been adopted”which “the aid would be released up to two thirds of the envelope initially planned”or 154 million euros.
“The last third of the envelope will be released in 2025 once the conditionality (…) relating to a reform of the TGC has been adopted by Congress. Without this it cannot be”specifies the letter.
The resignation of members of the loyalist center-right Caledonia party together brought down the local government. The election of a new executive must take place on Tuesday January 7.
France
