The economic stimulus package of the Federal Government included, among others, the payment of a child bonus of 300 euros per child. Generally, that money was paid out in two instalments to each household with a child entitled to children’s allowance: 200 euros in September and 100 euros in October. The bonus was not offset against social benefits but has to be compared, like children's allowances paid, with the effect of tax-free amounts for children under the fiscal equalisation of benefits for families to find the option most favourable for the taxpayer.
More than half of the households used the child bonus for consumption purposes, especially lower-income households
In August 2020, that is before the child bonus was paid out, slightly more than one out of two households entitled to children’s allowance (55%) intended to spend the child bonus or part of it for consumption purposes. That percentage amounted to 60% in December 2020. Consumption purposes comprise the purchase of durable consumer goods (for example clothing and footwear, furnishings and household articles, electrical appliances, vehicles), expenditure on food and beverages and on entrance fees and services provided outside the home for leisure, culture and sports (including going to restaurants and pubs or on vacation).
In the period from August to December 2020, up to two thirds (57% - 69%) of the households entitled to children’s allowance with a monthly household net income of less than 2,000 euros planned to spend the child bonus entirely or partly for consumption purposes. The percentage of households with an income of more than 5,000 euros planning to do that was smaller (46% to 55%).
Another frequently mentioned option was saving the child bonus but this purpose lost in importance in the course of time. While roughly six in ten households (61%) planned to save the entire child bonus or part of it in August 2020, that is before the child bonus was paid out, only half of the households (53% to 54%) intended to do so from October 2020 when the second rate was paid out. The child bonus is not offset against social benefits but compared with the effect of tax-free amounts for children in the income tax assessment from a specific level of income. Between August and December 2020, one in four households entitled to children’s allowance (24% to 27%) assumed that its child bonus would be offset completely. This may have been the reason why households put the child bonus away (at first) and did not use it for consumption purposes.
In addition to consumption and savings purposes, roughly one household in five (16% to 21%) intended to use the entire child bonus or part of it to repay debts. One fourth of households (25% to 28%) used the child bonus for other purposes.
Question: What will/did you use the child bonus for? - Please distribute 100 points among the options listed. Assign 100 points to an option to state that you used/intend to use the entire child bonus for that purpose and assign 0 points to indicate that you have not used/will not use any of the money for that purpose. You may also distribute the points among the relevant options.
Child bonus primarily used to purchase durable consumer goods
Every month 71% to 79% of the households which used the entire child bonus or part of it for consumption purposes purchased durable consumer goods. In roughly half of the cases where, for instance, clothing, furnishings or electrical appliances were bought, these purchases had not been planned for that period. This means that purchases of durable consumer goods were brought forward and unplanned additional purchases made because of the child bonus (possibly in combination with the temporary VAT reduction).
52% to 63% of the households which used the child bonus for consumption purposes bought food and beverages. Approximately half of the households (49% to 51%) intended to use the child bonus to pay entrance fees and buy services provided outside the home in the field of leisure, culture and sports in August and September 2020. That percentage went down markedly from October 2020 to only 34% in December 2020. This was probably due to the increasing restrictions on account of the coronavirus pandemic.