I have no experience with the allowances myself because I am not eligible for them anyway, but it is logical to a very extent, especially for low incomes.
Take the housing allowance for example, you could abolish it and add it on top of benefits or a tax-free base as compensation. But the rent is not the same for every social housing home; for people in this category, a few tens of euros can make a big difference. Take a social rental home for 580 euros per month, I think you can get a maximum allowance of 320 euros for that or something like that.
You can of course cross this off linearly to arrive at approximately the same amount, but then the costs also skyrocket with how much a social rental home costs in rent. It is already heavily regulated, of course, and if the government steps up to be more efficient, an increase in rent is immediately a complaint for the government that they are not compensating enough. Changing the whole penny does have the effect of market forces that people see how much it actually cost. If the rent goes up, people will complain to the housing association if this is too much and an investigation can be conducted or an objection can be lodged.
This is just an example, the healthcare allowance seems a bit simpler to me, but childcare allowances are relatively high and difficult to offset by reducing taxes because you cannot fully include it. Then the tax should be reduced for everyone, even without children, so that they do not suffer worse.
Working must absolutely be rewarding again, I agree, but I think it is highly feasible whether it is feasible through allowances because that will solve some overhead and in the long term will only create additional problems. I’m thinking more about the fact that the tax brackets need significant corrections despite the allowances. Tax-free base, brackets that only later go to 49.5% because this is not at all in line with rental and purchase prices of houses, especially for singles.
Complex problem, but if they adjust the tax system so that it can implement various changes more easily, then that is of course useful for trying and reversing things more quickly.
