Status: 03/18/2023 3:19 p.m
In the dispute between the FDP and the Greens over the financing of the planned basic child security, Family Minister Paus has presented an alternative proposal. The project is to be financed with a reduction in child allowances.
There has been a dispute in the government for weeks over budget planning. The departments are making billions of requests to Finance Minister Christian Lindner, which he does not want to fulfill in this way. This also applies to basic child security.
Federal Minister for Family Affairs Lisa Paus has now proposed lowering the child allowances in order to finance the project. “It is absurd that wealthy families are relieved much more of the child allowance than poorer families who only receive child benefit,” said Paus of the “Neue Osnabrücker Zeitung” (NOZ). The minister spoke out in favor of lowering the allowances and using the resulting additional tax revenue to finance part of the basic child security. “It would be a breakthrough to finally eliminate this injustice in the system,” she said.
Top earners benefit from the child allowance
The background is a complex regulation in the German tax system: Parents currently receive 250 euros per child per month from the state. At the same time, there are the so-called child allowances. When calculating the tax, these are deducted from the income, so that the tax burden is reduced.
The tax office automatically determines whether child benefit or allowances are more worthwhile for the parents. If it is the allowance, it will be offset against the child benefit that has already been paid out. Top earners benefit from this: Your tax savings are greater than the sum of the child benefit paid out.
Paus wants twelve billion – Lindner gives a maximum of three
According to the plans of the traffic light coalition, the basic child security is to replace the previous child benefit and provides, among other things, simplifications for families when applying for and the type of benefits. Child benefit, child allowance and also financial support for school trips should be bundled in the basic child security system and reach more beneficiaries in the future. Whether that should also mean a multi-billion dollar financial increase is disputed, especially between the Greens and the FDP.
Paus had announced a requirement of twelve billion euros from 2025. She doesn’t see any leeway for that either, she told the “NOZ”. “Twelve billion euros are at the lower end of what would be needed to significantly reduce child poverty in Germany,” says Paus. The minister emphasized that she wanted to initiate a turnaround: “The basic child security is a paradigm shift, not only technically, but if possible also with a clearly noticeable increase in benefits for children in poorer families.”
Federal Finance Minister Christian Lindner only wants to spend two to three billion euros on the project. Paus referred to the increase in the cost of living due to inflation: “The two billion that Mr. Lindner is offering are quickly gone without us having achieved any structural improvements.”
Bas brings wealth tax into play
From the point of view of Bundestag President Bärbel Bas, it is correct in relation to the budget planning “that the money is not being spent lavishly”. At the same time, however, “the distribution of wealth in Germany” must also be considered, according to the SPD politician in the newspapers of the Funke media group. “If we don’t want to incur any new debts, the question remains: How do we deal with the wealthy, can’t we also have a different tax policy?”
A wealth tax for particularly rich people could be a way “to relieve people today without new debts for future generations, to strengthen our education system or to invest in our infrastructure,” said Bas. This applies even if Lindner “doesn’t want to hear it”.
Klingbeil: Clearing the reform backlog of recent years
SPD leader Lars Klingbeil asked the cabinet to come to an agreement. “As party leader, I’m not involved in the government’s budget negotiations. But as party leader, I expect that the goals of the coalition agreement will be implemented with the help of a serious budgetary policy,” he told the “Welt am Sonntag”.
It is important to him “that the goals of the coalition agreement to modernize Germany are adhered to in order to clear the reform backlog of recent years”. “For me, it’s mainly about three areas: new economic strength, security for our country and social cohesion.” In a difficult budget situation, these goals have “by no means become obsolete, but even more urgent”. “If the government doesn’t come up with a good solution, I would certainly have a few more proposals for budgetary policy,” added Klingbeil. “I’d be happy to make them public.”