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Childcare Allowance Increase Gets Trimmed
Originally, the government intended to raise the childcare allowance significantly in 2027. That plan has now been dialed back so the money can instead go toward reversing previously planned cuts to social security. According to documents outlining the 2027 national budget, this reduced increase will free up €350 million next year.
Insiders were quick to clarify that this doesn't mean parents will end up paying more for childcare. The allowance will still go up compared to this year's level, meaning families will still see their childcare costs drop. One source close to the matter put it simply: it'll be a bit less than originally expected, but parents will still notice real savings. Another insider added that this is really just a temporary delay, and the government plans to make up the difference starting in 2028.
Box 3 Tax Overhaul Faces Further Delay
The Cabinet also remains stuck on how to handle the incoming Box 3 tax overhaul, which had been scheduled to take effect in 2028. Coalition parties have spent weeks going back and forth on the issue without reaching common ground. As a result, they're now planning to delay the legislative proposal currently sitting in the Senate, according to leaked budget documents.
The new system was designed to tax people based on their actual investment returns rather than an estimated figure. But pushing back the legislation now makes it far less likely the 2028 deadline will be met. If that happens, the existing tax method - which relies on a fictional, calculated rate of return set by the Tax Authority - will stay in place for longer. That current setup tends to benefit those earning higher profits, since it results in lower tax bills for them. As things stand, the government is already losing out on more than €2 billion annually in tax revenue because of it.
What the New Plan Would Have Changed
Under the proposed system, people would be taxed annually on real returns from their savings and investments, even including profits still tied up in shares that haven't been sold. The idea faced pushback from multiple political parties, but it still made it through parliament earlier this year, largely because lawmakers agreed doing nothing wasn't a better option. Just before the Senate was set to review the bill, Finance Minister Eelco Heinen revealed that changes were coming. Since then, though, the coalition hasn't been able to agree on what those changes should actually look like, leading to yet another delay.
