Tax credits: Gone today, here tomorrow
For years, the Finance Ministry has been discussing proposals for mandatory pensions. The issue always comes up, but is always ruled out for the same reason: How can the state force someone who barely makes a living to save for a pension?
How can someone be forced to reduce his meager earnings now for distant old age?
It makes little economic sense, and probablt makes little moral sense either. So the idea was vetoed time after time, until a new idea arose: tax credits.
It is no secret that treasury officials dislike the tax credits proposal. It is like an allowance for poor families, but with no guarantees that the money will be used properly.
To prevent the money from being misused, the treasury tried to link the tax credits to vouchers limited to specific purposes, such as education and child care.
But then, along came a magic double formula: both a mandatory pension and a tax credits.
Generally, families earning peanuts that receive tax credits are also the ones with no pension plans - so one will pay for the other.
Some money will be left over, but to a large degree, combining the two proposals will destroy the ability of the tax credits to improve the lot of the working poor, because so little will remain in their hands.
It is not clear whether they will be comforted by the fact that their future will improve, and it is not clear which side won the fight between Hirchson and his underlings - even if it seems that he forced them to bend to his will.