After divorce, the ‘Family Budget’

Middle class parents, the bedrock of the Nationalist Party's electoral hegemony, will be the main beneficiaries of the budget.

The major fiscal reform in the budget is the introduction of a new income tax computation for all parents irrespective of their marital status as every parent will be eligible for the tax cut.

Significantly this measure will mostly benefit people with higher incomes.

This will mean that married couples with children will save between €150 for those earning €9,000 to €840 for those earning more than €21,000 in income tax yearly payments.

More than 55,000 families will benefit through this measure which will result in a decrease of €10 in government tax revenue.

Finance Minister Tonio Fenech said general income tax cuts would have cost the economy €40 million.

The declared aim of this measure is to make the labour market more attractive for parents.

This computation will be eligible for parents supporting children who are not gainfully employed up to 18 years of age. If the children are still in tertiary education, this age limit is extended to 21 years.

Another family friendly measure is the increase of maternity leave should be from 14 weeks to 16 weeks as from next year and a further two weeks in 2013. The extra weeks will be payable from public finances with a fixed weekly rate of €160.

The government will also invest €1.3 million in the opening of three new childcare centers and will continue the tax credit system for women who return to work after pregnancy.

Parents whose children attend courses in cultural and creative teaching institutions will benefit from a €100 reduction on taxable income for costs related to courses given by licensed or accredited schools or teachers.

The government will also set up a €1 million fund in order to strengthen the sustainability of private schools. This fund will be allocated to private schools according to the number or registered pupils in this way: €95 for every child in kindergarten, €145 for every pupil in primary school and €170 for every pupil in secondary school.

The government will also increase fiscal incentives for parents of children who attend these schools by increasing the maximum amount of tax reduction given to parents who pay school fees for their children. These reductions will increase:  from €1,200 to €1,300 at the level of daycare, reception and kindergarten; from €1,200 to €1,600 at primary level; and from €1,600 to €2,300 at secondary level.

The income tax exemption for relatives of elderly people helping their parents live in private nursing homes. As from next year, this initiative will be increased by €500 to €2,500.