Macroeconomic Effects of the Introduction of "Familienbonus Plus" and "Kindermehrbetrag"

Based on calculations using the WIFO-Micromod microsimulation model, 43 percent of the net relief for private households resulting from the introduction of the "Familienbonus Plus", a family tax credit, and the "Kindermehrbetrag" (a supplementary child benefit) are attributed to the middle third of the household income distribution, while 28 percent will go to the upper third and 29 percent to the lower third, respectively. In 2020, private households are expected to reap an annual 1.2 billion € as extra tax benefits which will rise to 1.56 billion € by 2022. Simulation of the medium-term macroeconomic effects with the WIFO-Macromod macrosimulation model (which does not include any additional counter-financing measures) shows that after four years real GDP would be 0.3 percent higher than in the baseline scenario without the introduction of the new tax relief measures for families. The number of employees should increase by 11,000, real per-capita wages should grow by 0.15 percent and the price level should rise by 0.4 percent. In the fourth year, total public debt should be 1.96 billion € higher than in the baseline scenario.