Coalition agreement: lower labor tax, higher child benefits

4/7/2015 11:57 AM
Category: Politics

Although the coalition agreement is yet to be published, a number of deals are highly likely to materialize.

Minimum wage

Minimum salary rate and the tax-free minimum rate were under debate before the elections with most of the parties proposing different schemes. According to Social Democrat Helmen Kütt, the government will aim to agree with the employee and employer's unions to peg the minimum salary at 45 percent of the national average wage. Currently, the minimum salary is decided on by the unions, with annual updates. The current figure is 390 euros, amounting to 38 percent of the average monthly salary.

Labor tax

The Reform Party says that social tax will be cut from 33 to 32 percent at the beginning of 2017 and the tax-free minimum will increase from 154 to 205 euros per month.

Child benefits

The current government has already increased monthly child benefits from 19 euros to 45. That figure is set to increase to 60 euros for the first and second child, and 100 euros for the third.

Alimony fund

The state will set up an alimony fund to pay single parents up to 100 euros per month if the other parent has failed to pay up. The state will then demand the money from the deadbeat parent. The minimum monthly alimony rate is pegged to the minimum salary, with the alimony rate at 50 percent, of the minimum wage, currently 195 euros per month.

Defense

The new government will increase benefits to conscripts, increase salaries for reserve troops during military exercises and offer more free defense training. Defense studies in secondary schools will also be made mandatory.

Fines

The base rate of fines for misdemeanor offenses will double to a rate of eight euros per day. The current justice minister, Andres Anvelt, told Postimees the rate has remained unchanged for 10 years, and thus will bring state coffers an additional 10 million euros each year.

J.M. Laats

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