Demographic Crisis: More Families to Receive Child Allowance

Total Croatia News

The number of families which receive a monthly child allowance should increase by 100,000.

Minister of Demography, Family, Youth and Social Policy Nada Murganić confirmed that the income threshold for families to receive the child allowance would increase, which will ultimately lead to an increase in the number of families receiving the child allowance by as many as 100,000, reports Jutarnji List on November 13, 2017.

According to official data, in October this year the child allowance was paid to 151,416 families, so the increase would be around 66 percent, which means that the children allowance would be received by some 250,000 families with children.

According to Eurostat data, around 500,000 households with children lived in Croatia in 2016, suggesting that every other family with children would receive the child allowance. The detailed proposal with precise calculations will be presented today to the government’s Council on Demographic Revitalisation, a body composed of ten ministers led by Prime Minister Andrej Plenković.

“By raising the threshold for receiving the child allowance, we will achieve a greater coverage of our young families, whose children will receive the allowance. In this way, these families will also be given the possibility to obtain a pro-natality supplement for the third and fourth child,” announced Minister Murganić.

This could be the first step towards the introduction of a universal child reimbursement, which was announced earlier this year, among other measures, by Marin Strmota, the State Secretary for Demography. He said that the government planned to modify the system of incentives for parents by 2019 in a way that all children – without any conditions or thresholds – would receive the same benefits from the state.

In this way, each child would be in the same position, which is not the case now: due to tax breaks, children whose parents have high incomes currently bring their families far more than children of parents with low salaries. The current tax breaks mean that an employed parent, depending on the number of children, does not have to pay taxes to a certain threshold of income earned. When the income is higher, the value of the tax break grows.

Thus, parents of three children in an average family do not have to pay taxes on income of up to 8,000 kuna. However, low-income parents, for example, those earning 3,000 kuna a month, do not benefit from the increased tax breaks because they do not make enough money to use them.

Therefore, it is planned that these allowances will be abolished and that the child allowance should be distributed equally to all children (the amount would increase progressively with the number of children in the family). In this way, parents with higher incomes would receive a somewhat lower amount than they currently have through tax breaks, while those with lower incomes would receive the increased amount.

The provision for the abolition of some of the tax breaks for family members, in accordance with the existing Law on Income Tax, will enter into force on 1 January 2018.

The child allowance is today received by all children whose families have incomes less than 1,663 kuna a month per family member, with amounts received in a range between 250 and 300 kuna. If a family is eligible for the child allowance, it can also obtain a pro-natality supplement in the amount of 500 kuna for the third and fourth child. In the 2017 state budget, 1.45 billion kuna have been appropriated for the child allowance.

According to the new proposal, the government is expected to introduce the child allowance in the amount of 100 kunas for families with average incomes between 1,663 to 2,195 kuna a month per family member.

Translated from Jutarnji List.


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