Ways and Means to Assist Families Within the Scope of a Tax Reform

On an international scale, Austria spends an above-average portion of its economic output on family benefits. Nevertheless, fertility rates could not be stabilised much less raised, nor could equality be achieved to the necessary extent. Against this background, the study examines the effects that various approaches to family assistance schemes can have on women's labour participation rates and the material situation of families. To this end, the study structurally adapts national and international analyses to reflect the Austrian situation and discusses possible effects of alternative strategies. Starting out from this, it assesses the direct consequences of family assistance policies for the public households and evaluates the "family package" as an element of the 2009 tax reform. Among the reform options for the Austrian system of family benefits, sketched in conclusion of the study, are, regarding monetary benefits, specifically the abolition of the sole earner's tax credit for childless families and the introduction of an income-dependent child care benefit payable for a relatively short period, and subject to the second parent taking minimum parental leave, as well as a cap on payments. Considering that any increase or strengthening of women's labour participation rates crucially depends on an infrastructure of child care facilities that are sufficient in both quantitative and qualitative terms, recent steps towards improving that supply are welcomed. Nevertheless it would be necessary to direct further resources into this field in addition to those investments already planned. And finally, the catalogue of reconciliation tools should be extended to include not just a commitment by the government and tools used at the private household level (such as tax breaks granted for child care costs) but also the company level, e.g., by increasing tax breaks for company child care facilities.