Paus wants to reduce allowances for billion-euro projects

Berlin If a minister wants to spend ten billion euros more on her prestige project than the finance minister wants to allocate to her, then one can certainly speak of irreconcilable differences.

But despite the already complicated negotiations about the federal budget, Paus insists on their financial needs and is therefore now making a suggestion as to where the additional money could come from. “I’ll be a step more specific,” announced the 54-year-old on Monday in Berlin. Her plan: She wants to reduce child allowances in order to raise at least part of the missing ten billion.

The aim is to create basic child security. The coalition had agreed to bundle the previous financial support such as child benefit, social benefits for children, the child allowance and parts of the education and participation package in one service and to grant this automatically.

In the end, there should be a guaranteed amount for each child and an additional amount that depends on the parents’ income. The whole thing is complicated because, for example, there are interdependencies with maintenance payments, housing benefit or student loans.

>> Read also: Lindner postpones the presentation of the basic budget values

Currently, many families are not claiming part of the money to which they are actually entitled. Be it because individual services are not known – or the bureaucratic hurdles are simply too high.

Child allowance: Complex tax construct

With the child allowance, Paus is addressing a complex tax construct. First, there is child support. This is currently at least 250 euros per month for each child. On the other hand, there are also child tax allowances.

When calculating the tax, the allowances – the child allowance and the allowance for child care and education or training needs (BEA) – are deducted from income, so that the tax burden is reduced.

During the annual income tax assessment, the tax office then checks whether the allowances for children are more favorable for the parents or whether the child benefit paid out is more favorable. Top earners benefit from this: Your tax savings are greater than the sum of the child benefit paid out.

Specifically, Paus calculated: “Top earners receive the equivalent of 373 euros per month through the child allowance, low and normal earners through the monthly child benefit only 250 euros.”

Paus suggests an amount for everyone

The Green politician not only considers this to be socially unfair. She also recognizes a source of income for basic child security here. If the child allowance were lowered to the level of child benefit, there would be the same guaranteed amount for all children every month – and there would be additional tax revenue from the top earners.

According to the minister’s idea, this additional income could then flow into the financing of basic child security. Paus therefore proposes reducing the partial amount for care, education or training. The former financial policy spokeswoman for the Greens parliamentary group in the Bundestag definitely has the constitutional hurdles in mind.

Because: The Federal Constitutional Court has made it clear several times that the subsistence level of children must be exempt from tax. This is done through the child allowance, but also through the BEA allowance.

Judges at the Federal Constitutional Court

The court has repeatedly emphasized that a child’s subsistence level must be tax-free.

(Photo: IMAGO/Political Moments)

The minister sees the fact that the last clarification from Karlsruhe on the BEA tax exemption date back around ten years as a lever for her plan: there is now a much better childcare infrastructure and the additional tax deductibility of childcare costs. Paus’ conclusion: “The BEA allowance is not necessary.”

In order to prepare for the conflict with Lindner, the Green politician even commissioned a legal opinion that should be available “soon”. “So my plan isn’t Nirvana, it’s legal,” she explained.

The Paritätische Gesamtverband called on the federal government on Monday to find a way to finance basic child security during the budget negotiations. Every fifth child in Germany is affected by poverty. Something like that shouldn’t matter to the entire traffic light. “Top earners benefit significantly more from the current system of child benefit and child allowances than poorer families,” explained CEO Ulrich Schneider, adding: “All children must be of equal value to the state.”

The majority of Germans are in favor of basic child security

Lowering the tax allowance for care, education and training is therefore worth considering. “In this way, higher earners would make their contribution to poorer families having better chances in the future,” said Schneider.

The Institute for Demoscopy Allensbach delivered fresh data on Monday – albeit on behalf of the Ministry of Family Affairs: According to this, 60 percent of the population support the introduction of basic child security. Even if the associated costs are pointed out.

Of course, the coalition partner FDP sees things differently. Finance Minister Lindner opposed the family minister via Twitter. He pointed to recent increases. For example, child benefit has just seen the biggest increase since 1996, the child allowance has also increased, and there is also an immediate allowance for children affected by poverty.

“We spend a total of seven billion euros more each year to combat child poverty,” explained Lindner. Now it’s about getting the most out of every euro. “Many services are not called up because they are unknown or complicated. Changing that should be the priority.”

But that will also be expensive: According to Minister Paus, it would “cost five billion euros alone” if all the services to which a child is currently entitled would be used.

More: Child benefit and Co. – An overview of the family policy benefits

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