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As you know, there is currently a monthly fee of € 60 for each child. It is planned to increase these benefits to 70 euros from next year.
Parents of all children can receive the same child money, whether they earn a million or just minimum wage, live in a luxury home, or rent a bedroom.
The liberal parties invited to the new ruling coalition are critical of such an arrangement. According to them, only those who really need it, the poorest families, should receive the benefits.
Sigismund Mauricas, chief economist at Luminor Bank, is convinced such a proposal is a bad idea. He presents a number of arguments in support of that opinion on his personal Facebook account.
“Differentiating families into” poorer “and” poorer “would introduce” livestock “not only into the tax system, but also into the benefits system, because as” poorer “they would appear as” poorer “.
It would increase the shadow, because it would not be worth it for families that want to convert or remain the “poorest” (to receive the money from the children) to officially declare their labor income “, writes the economist.
Furthermore, he said, paying benefits for not all children would create a dependent society and reduce incentives to work, because if the parents of the “poorest” family found work, they would be more likely to become the “poorest” and lose. your children’s money. . To avoid this, parents would not bother looking for work and living off the child’s money or shadow income.
Finally, Ž. According to Maurico, the implementation of the liberal proposal would increase the bureaucracy, since it would require a lot of work to divide the families into poor and needy, fighting against rebellious families that potentially hide their income. All of this allegedly encourages corruption, as parents would be interested in bribing such officials to continue receiving money from children.
“The universal cash benefit for children currently valid in Lithuania does not have any of the listed disadvantages. Its only drawback is the relatively high cost (around 500 million euros a year or 1% of GDP).
However, in any case, EU countries provide a lot of support to families raising children (1.7% of GDP) and, of all the support mechanisms, the universal monetary benefit for children is the best option ”, argues Ž. Mauricas.
According to him, another alternative is to reduce the tax burden on families with children by applying an additional tax-free income tax rate (PNPD) for each child. This procedure was valid in Lithuania until 2018.
According to the economist, the advantage of the PNPD is that this system encourages entry into the labor market and reduces the shadow (because if you do not pay taxes you do not receive support), but in this case unemployed families still usually receive some support, so the The result is similar, it only increases administrative costs. load.
In addition, the PNPD has drawbacks, as large families do not always have sufficient income to fully benefit from the tax credit.
“I have previously proposed a system that would allow wealthy families to voluntarily donate their children’s money to those families who need it most. It would be a more efficient system, as there would be no need for bureaucrats to explain which family is ‘rich’. And which one is “poor.” It would also be more in keeping with the spirit of liberalism. Wouldn’t it? “Ž He asks rhetorically. Mauricas.
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