Child allowance to be cut

The Finance Ministry is proposing a uniform allowance of NIS 140 per month per child.

One of the biggest changes in the 2013-14 budget proposal will affect the child allowance, on which the government spends NIS 7 billion a year.

The first change will be to abolish the progressive rise in the allowance as the number of children in a family increases. Currently, the allowance for the first child is NIS 175 a month, rising to NIS 263 for the second child, for a total of NIS 438 a month. The Ministry of Finance is now proposing a uniform allowance of NIS 140 per month per child.

The change means that a family with three children will see its allowance cut by 40% from NIS 700 a month to NIS 420. The government will save NIS 280 a month and NIS 3,360 a year.

The Ministry of Finance says that the reduction is justified, citing "the expansion of government services provided to Israeli children, such as free education from the age of 3, expanded support for daycare and afternoon activities."

The Ministry of Finance also proposes freezing the child allowance's linkage to the Consumer Price Index (CPI) until the beginning of 2015. For the first time, the ministry proposes cancelling the child allowance for parents whose total annual income from labor and capital exceeds NIS 800,000. Put another way, parents who will pay the income surtax will also not receive the child allowance.

The Ministry of Finance estimates that the changes will save NIS 975 million in the rest of 2013 and NIS 2 billion in 2014, resulting in a NIS 3 billion saving for the period of the budget.

Published by Globes [online], Israel business news - - on May 7, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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