New Conservatives' benefit hike would cost hundreds of millions

Take note – story published 5 years ago

The proposals by the New Conservative Party (JKP) on changes in social benefits and pensions would need several hundreds of millions of euros in the state budget, according to estimates drawn by ministries.

JKP in the new government plans to increase the minimum non-taxable income on pensions and wages to €500 a month and the minimum pension to €200 in the coming two years.

Estimates drawn up by ministries at the disposal of LETA suggest that if the differentiated non-taxable income is annulled and the non-taxable minimum income is set at €500, revenue from individual tax would drop by €500 million. If the differentiated nontaxable income system is preserved, but the lowest non-taxable minimum income is raised to €500 it would mean €130 million loss to the budget.

Raising nontaxable minimum income on pensions to €500 would mean that revenue from individual income tax would drop by €50 million, according to the Finance Ministry.

The Welfare Ministry has assessed the impact of increase of the minimum pension. If the minimum pension is raised to €215 a month, additional €524 million a year would be necessary for pensions.

Also, the JKP plan provides for increase of social benefits for children – to €50 for the first child, €100 for the second child, and €150 for the third and further children in family. Such increase of child benefits would require additional €252.7 million.

In order to stop the rapid outflow of medics from the country, JKP has promised to increase net wages of doctors to at least €1,700 a month, and wages of nurses to €800 a month. The Health Ministry said that this plan would require additional €222.3 million from the budget for doctors and €125.3 million for nurses.

Also, more additional funding would be necessary to ensure bigger financing for the health care sector, for science, reducing property tax.

JKP’s plan provides for increase of revenue from taxes to 35% of the gross domestic product (GDP) from the current 31% of GDP. Increase by 4% would mean that by €1.2 billion more taxes would be collected. JKP plans to achieve this by considerably reducing shadow economy, expanding the tax base, making the tax system more progressive and transparent.

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