The Reform of Family Benefits

The measures proposed in the "family package" have the effect of excluding from taxation about half of the costs of raising children. Various computations show that the majority of those obligated to provide child support fare better under the proposed regulation which provides for tax credits of 700 ATS per child per month and for an increase in the family allowance than under a rule which provides that half of the child support (compiled according to the percentage method) is tax exempt. The advantages of the new regulation decrease with the age and the number of children. This disadvantage is offset, however, for earners of low income with more than three children by the new supplement of 400 ATS per month, which is financed by the Family Allowance Fund. The "family package" will raise personal disposable income by ATS 12 billion in the year 2000 and the following years, stimulating private consumption and thus boosting employment.