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Home NATIONALTax deduction not to benefit families sans income
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Mon, 30 Jun, 2014 12:10:57 AM
FTimes-STT Report, June 30
 
Mother with children in family. Photo – Lehtikuva.
The tax-deduction move for families with children agreed during the mini-government negotiations will benefit low-income families but not those without any or a sufficient level of income.
 
According to the planned initiative, low-income families with children will get back much of the child benefit cuts through tax deduction. 
 
Most of the families will however not be benefited from the tax deduction as some do not have any income or sufficient income from which tax deduction can be made.
 
Families on income support will not be affected by the child benefit cuts, but, on the other hand, they will not benefit from tax deductions either.
 
The planned tax deduction is still in the initial stage. The tax deduction annual outlay is 70 million euros while that of the child benefit cuts stands at 110 million euros.
 
As a result of these combined changes, most of the families will remain at a loss, since less money is reserved for families with children through tax deduction compared to the child benefit cuts.
 
Mother and two year old child boy at home. Photo – Lehtikuva.
For instance, a single-child family will receive 90 euros less per year after the child benefit cuts.
 
The tax deduction to cover for child benefit cuts was envisaged during the spending-limit talks held in March. The Greens and the Christian Democrats have been presented as the architects of the tax deduction system.
 
“There was no political willingness to withdraw the child benefit cuts and neither will this compensate fully the child benefit cuts,” pointed out Outi Alanko-Kahiluoto, the chair of the Vihreä Liito (Green League) parliamentary group.
 
The government programme does not clearly define how much the child benefit tax deduction will affect low-income families in relation to high-income families.
 
According to the programme principle, the tax deduction will be centred on low-income families.
 
It is also unclear whether tax deduction of single parents will be greater than that of two-parent families. The last time the country used tax deduction on families with children was back in 1994 in which single parents had a raised tax deduction.
 
 
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