Tax measures to offset impact of new healthcare insurance 20 September 2005
The introduction of the new healthcare insurance system will have a significant impact on purchasing power in 2006. Care benefit will provide a recognisable form of compensation, but tax measures will also help offset the impact of the new system.
The package includes the following measures:
- general tax credit to be raised by € 78
- specific combination tax credit to be raised by € 156
- combination tax credit to be reduced by € 85
- supplementary elderly person’s tax credit to be raised by € 272
- elderly person’s tax credit to be reduced by € 85
Furthermore, income in the first tax band will be taxed at 34.15% in 2006 (compared with 34.40% in 2005) and income in the second band will be taxed at 41.45% (compared with 41.95% in 2005).
General child tax credit, supplementary child tax credit and extra supplementary child tax credit for families with more than two children are to be merged into a single child tax credit. The government is seeking to reduce the administrative burden for taxpayers and minimise the poverty trap. The new child tax credit avoids sharp falls in income when income thresholds are crossed. In addition to these changes, spending on child tax credit will be increased by € 52 million.