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Germany Unites On Plans To End Health Contribution

by Ulrika Lomas, Tax-News.com, Brussels

06 November 2012


Following hours of intense and difficult negotiations, Germany’s ruling Christian Democratic Union and Free Democratic Party (FDP) have finally united on plans to abolish the controversial practice fee.

During the latest summit meeting, coalition leaders also reached a consensus on plans to introduce a care allowance in Germany for parents electing to care for their young children at home.

Under increasing pressure in the run up to the election campaign, Germany’s black-yellow coalition government agreed to reduce the burden on individuals in Germany by billions of euros.

Given the surplus in the statutory health care fund, coalition leaders agreed to abolish the unpopular practice fee from January 1, 2013. Introduced in Germany in 2004, the practice fee served to generate almost EUR2bn (USD2.56bn) a year to cushion the fund.

In return, the FDP finally backed Christian Social Union plans to introduce a care allowance in Germany from August 1, 2013. The German Bundestag or lower house of parliament is expected to vote on the proposal shortly during a third reading.

Coalition leaders also supported plans to top up, using tax revenues, the pensions of low-income earners whose pensions are below the basic amount, despite having contributed for forty years and having had a supplementary private pension.

Despite the latest proposals, the government still intends to meet the debt brake target in 2013 and to ensure that there is no structural new debt in the 2014 budget.

TAGS: individuals | tax | pensions | public health | budget | fees | health care | Germany

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