The proposed 2021 state budget, fashioned with strong socialist leanings, has been delivered to the National Assembly for debate and approval before the end of 2020. After three months of negotiations between political parties on the Left, the document focuses on strengthening support for the unemployed, single-parent families, the self-employed and informal domestic workers. In other words, the upcoming budget will focus on the groups hardest hit by the Covid-19 pandemic.
Among several measures meeting the left-wing coalition demands, the government has decided to writeoff old debts to Social Security and recover furloughed railway workers. In addition, the government promises to hire 3,000 non-teaching assistants for schools. Here is an initial preview of some of the key points in the State Budget for 2021.
Social support: facing the pandemic
New extraordinary social support measures are expected to confront the drop in household income. It will be a benefit that will cover employees and domestic workers for one year and sole traders for six months.
Social Security: Farewell to 20-year-old debts
The oldest and smallest debts to Social Security may be forgiven starting next year. If passed, the government is authorized to forgive amounts when there is a debt for contributions and benefits that are 20 years old or more or that are less than €50 and more than 10 years old.
Unemployment: Benefit to €505
The reference value of installments is €501.16 and the minimum amount is €50. The lower limit for unemployment benefits will increase from the current €438.81 to €505. It is also foreseen that public daycare centres will be free of charge for students in the 2nd income bracket.
Health: Repeated hiring
The government announced the plan to recruit 4,200 professionals for the National Health Service (SNS). By the end of the first quarter of 2021, the needs for medical professionals will be assessed to determine who may benefit from a risk subsidy of €219.40 payable every other month. Also, there will be an investment of €90 million for the sector to improve facilities and equipment in health centres and family health units.
School support staffing
The Government pledges to hire 3,000 professionals, promising a revision of the criteria for calculating non-teaching staffing in schools.
Security forces: €10 million allocated to housing for police
The government intends to guarantee basic living conditions for police and other security forces who are displaced by their job placement. The plan is to launch an investment of €10 million in housing for police in 2021.
Tourism: Credits for those who spend in hotels
According to the proposal, visitors will accumulate credits during one quarter, amounting to the total VAT incurred in consumption in the sectors of hospitality, culture and restaurants. Subsequently, holiday makers can use this value during the following quarter in consumption in those same sectors.
By Dennis Swing Greene
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Dennis Swing Greene is Chairman and International Tax Consultant for euroFINESCO s.a.