2nd ROUND: Vote by the Bundestag on tax credits and allowances for commuters | News

(New: Details and breakdown)

BERLIN (dpa-AFX) – Due to high prices for heating, driving and the supermarket, the federal government has introduced several relief packages – some of which are due to be decided on Thursday evening in the Bundestag. In particular, there are several measures to ensure that citizens will have to pay lower taxes. Those who have a long commute to work will especially benefit from this.

Finance Minister Christian Lindner (FDP) argued during the first parliamentary debate that the relief should weaken “perceived inflation”. Every citizen should feel that the state relieves them. This is important to prevent a dangerous wage-price spiral that could drive the entire economy into stagflation – a combination of rising prices, economic stagnation and unemployment.

However, given high inflation, the package does not go far enough for the opposition. The government must act, especially when it comes to cold progress. It is a kind of creeping tax increase, with the salary increase completely consumed by inflation, but still leading to higher taxes. It is also criticized that the relief will only be visible with the tax refund for 2022, i.e. in the coming year.

The package to be voted on Thursday night includes the following measures:

The basic allowance is increased by € 363

The so-called basic income tax credit is to be raised from the current EUR 9,984 to EUR 10,347. As a result, all taxpayers have to pay lower income tax – retrospectively from January 1 this year.

The basic allowance is primarily the limit above which income tax is due in Germany. If your income is below this amount – after all deductions, such as income-related expenses – you don’t have to pay taxes. If you deal with it, you will pay tax on income from 10,348 euros in the future.

The advertising fee is increased

The flat-rate employee benefit is also expected to increase retroactively until 1 January. This is called lump sum income costs, which is automatically included in the tax return for all employees, if they do not themselves report higher income expenses. Until now, taxable income could be reduced by 1,000 euros, in the future it should amount to 1,200 euros.

Long-distance commuters receive a higher job allowance

Anyone who has to commute further to work is particularly hard hit by rising fuel costs. Therefore, the long distance commuter flat rate increase, which is expected to apply only in two years, should be postponed to this year.

Long distance commuters are citizens who must travel a minimum of 13 miles to get to work. Retroactively until January 1, they should be able to count 38 cents per kilometer in the future, three cents more than before. However, this should only apply until 2026.

The work allowance is part of the income related expenses on your tax return. However, long-distance commuters tend to receive a little more than the lump sum, so they benefit directly from the raise. The coalition emphasizes that those who will have to commute shorter will also relieve the higher flat-rate income tax. However, the commuter allowance is controversial, especially among Greens. While this can also be counted as rail or bicycle trips, they see it as promoting car traffic. The coalition has therefore agreed to reorganize the lump sum in this term of office and to better take into account environmental and social issues.

How much does it cost the state?

Finance Minister Christian Lindner (FDP) will lose around € 4.46bn in tax revenue this year alone due to a tax break – money that citizens also have in their wallets. By 2026, the costs will be around € 22.5 billion.

Further relief for kids and adults with little money

In addition to tax measures, the Bundestag also wants to decide on additional assistance for people with little money who are particularly struggling with high costs, e.g. heating and driving. Children, adolescents and young adults affected by poverty are expected to receive an immediate € 20 monthly bonus from July. Families whose income is insufficient or barely enough for the whole family can now receive € 229 per month per child from the state instead of € 209 in addition to child benefit.

Adult beneficiaries, such as those receiving Hartz IV or Unemployment Benefit II, should receive a one-time payment of € 200 to cope with the increased cost of living. Anyone who receives unemployment benefit I receives a subsidy of € 100. The money must also be withdrawn in July./tham/DP/ngu

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