Bundestag decides on tax breaks worth billions | News

BERLIN (dpa-AFX) – Due to high prices for heating, driving and in the supermarket, the federal government launched several aid packages – some of them were taken on Thursday in the Bundestag. In particular, there are billions of resources to ensure that citizens have to pay less 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 union criticized Thursday that the basic allowance will not be increased enough. In addition, the money will go to citizens much too late, after the tax return for 2022 in the coming year. The government needs to move faster, 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.

The package that was decided on Thursday evening includes the following measures:

The basic allowance is increased by EUR 363

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

The basic allowance is the limit above which income tax is payable 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 go through this, you will have to pay income tax of 10 348 euros in the future.

The advertising fee is increased

The flat-rate employee allowance will also increase retroactively until 1 January. This is called flat rate for income expenses, 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 have been reduced by 1,000 euros, in the future it will be 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 flat rate increase for long-haul commuters, which is expected to take place only two years from now, will be postponed to this year.

Long distance commuters are citizens who must travel at least 13 miles to get to work. Retrospective to January 1, they can count 38 cents per kilometer, 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 have to commute shorter will also be exempt from the higher flat-rate income tax relief. However, the commuter allowance is controversial, especially for the Greens. While this can also be counted as rail or bike trips, they see it as promoting car traffic. The coalition has therefore agreed to reorganize the lump sum before the end of this term and to better take into account environmental and social issues.

How much does it cost the state?

Finance Minister Lindner 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 has also decided to help people with little money, who are struggling with, for example, high heating and driving costs. Children, adolescents and young adults suffering from poverty will receive an immediate € 20 monthly bonus from July. Families whose income is insufficient or barely sufficient can now receive € 229 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, 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 is also to be paid out in July./tam/DP/jha

Leave a Comment