AEven if the cuts to parental allowance were to be milder according to the traffic light coalition’s current budget plans, more than 300,000 couples would be affected. According to calculations by the employer-related Institute of the German Economy in Cologne (IW), 310,000 couples with high incomes would ultimately be excluded from parental allowance.
In the coming year, 200,000 couples under the age of 50 will be affected, half of whom do not yet have a child. If the parental allowance cap falls to its final level in 2025, a further 110,000 couples will lose their entitlement, the institute announced on Tuesday, taking inflation and income growth into account.
According to a proposal from the Federal Ministry of Family Affairs by Lisa Paus (Greens), the limit for parental allowance should have been reduced to a taxable annual income of 150,000 euros for couples from 2024. The government factions weakened this plan somewhat during their budget discussions last week. The reference limit is now to fall in two steps: to 200,000 euros for couples whose children are born after March 2024, and then to 175,000 euros from April 2025. The limit for single parents should fall to 150,000 euros before tax.
Basic idea could be lost
The Family Ministry originally put the number of parents affected by the cap at around 60,000. According to the IW’s calculations, however, there would have been 435,000 couples; you also have to take into account those who could potentially have children. In perspective, according to the traffic light plans, 500 million euros should be saved annually in parental allowance. “In the short term, politicians are unlikely to be able to achieve their savings target because of the phased model,” says IW economist Wido Geis-Thöne.
In the long term, it could lose sight of the basic idea of parental allowance: to create a safe space for parents in the child’s first year of life, regardless of income. In the future, 175,000 euros can be reached quickly, even for a couple of academics without top positions. Due to high inflation, salaries are likely to rise significantly – “then tens of thousands more couples will no longer receive parental allowance support,” says Geis-Thöne.
The traffic light is also planning changes to the distribution of parental leave. The parallel purchase will be significantly restricted from April 2024. Mother and father should only be able to claim parental allowance together for one month within the first twelve months of the child’s life.
This news article has been translated from the original language to English by WorldsNewsNow.com.
You can visit the original source at the link below.
Original Source Link