Care reform creates major financial and bureaucratic burdens for employers - urgent need for follow-up taxes

BDA AGENDA 10/23 | Topic of the Week | May 17, 2023

By raising the contribution rate and implementing differentiation of contributions according to the number of children without first carrying out a digital check, policymakers are placing a heavy financial and bureaucratic burden on employers and failing to deliver on the promised moratorium on burdens. Especially in times of multiple crises and high price increases, everything possible must be done to prevent additional burdens in the interest of the economy and citizens.

In the parliamentary process of the Nursing Care Support and Relief Act (PUEG), a readjustment is urgently needed.

Instead of ensuring the long-term financial viability of long-term care insurance through sustainable structural reforms, the draft PUEG ensures a massive increase in contributions to social long-term care insurance. In fact, according to the draft, contributions are to be raised by €6.6 billion a year from 2024, which corresponds to an increase in the contribution burden of over 10%. Such an increase in contributions is by no means "moderate", as agreed in the coalition agreement, especially as contributions to long-term care insurance are currently rising by around 5% a year anyway due to the increase in the contribution assessment base as a result of higher wages, salaries and pensions. This places a heavy financial burden on employers as well as the majority of insured persons. The increase in long-term care insurance contributions means that the 40% target for stable social security contributions is moving further and further away. In times of high cost burdens and multiple crises, this is unacceptable for those paying contributions.

In addition to this massive financial burden on contributors, the additional bureaucratic burden on companies in implementing the reform is also unacceptable. In the form envisaged in the draft, the planned contribution level based on the number of children cannot be implemented within the envisaged timeframe, neither for employers nor for other contribution-paying bodies such as the pension insurance fund. This is already true because the employers and the other contribution-paying agencies usually do not have the necessary information on the number and age of the children, since both the number of children and their age regularly play no role in the processing of the employment relationship. This information can also only be obtained with a considerable expenditure of time and money, which cannot be guaranteed until the planned entry into force on July 1, 2023. The law may not enter into force until the retrieval of parental status can be made available via a functioning central office for all contribution-paying agencies. Only when this is functioning may the differentiation of contributions take effect - not before and not retroactively.

The federal government must remember and keep its promised moratorium on burdens.

Click here for the BDA statement on the draft law on support and relief in care (PUEG)