The government will cut child benefit as planned, after a final attempt to secure a compromise ended in failure on Thursday. The eight percent cut, which is expected to save some 100 million euros, was widely criticised when announced in the recent budget.
A tax deduction intended to mitigate some of the cut will remain in place, ensuring the SDP was willing to accept the plan rather than push harder for its reversal.
”Small and middle-income earners have to be protected and this tax deduction model does that,” said the SDP Parliamentary Group chair Jouni Backman after the meeting.
That is not a consensus view. The Green League, recently departed from government, wanted to use the money to reverse the benefit cut.
Green MP and liberal economic guru Osmo Soininvaara had said that the tax deduction announced at the end of the summer was an unsuccessful attempt to cushion the blow of the benefit cut, which was agreed earlier in the year.
The Labour Institute for Economic Research had said that the cut would cost small and middle income families some 20 euros per month. The institute found that the tax deduction will benefit lower-waged parents more than the middle-income groups.