Finance Minister Christian Lindner wants to relieve citizens of the high inflation with a tax cut of more than ten billion euros. At 10 a.m., Lindner presented his plans at a press conference followed by a question and answer session. You can read the statement in the minutes.
10.40 a.m .: Lindner ends the press conference. Thanks for reading along!
10.37 a.m .: The state would have recorded additional income, but this was clearly returned to the citizens, he says, for example through the reduction in energy tax. For reasons of European law, one cannot currently do without an energy price levy, Lindner continues. “We’re looking at what we can do to avert this,” says Lindner. The political will is to exempt the levy from VAT.
10.36 a.m .: The law is based on the Federal Ministry of Economics’ inflation forecast from spring, explains Lindner. After the autumn projection, this will be updated, he says.
10.34 a.m .: With the Inflation Compensation Act, an additional burden of 10 billion euros would be averted, Lindner repeats. He also points out that there is a cautious calculation for further relief, both for housing and citizen’s allowance. But he didn’t want to say more about it just yet.
10:31 a.m .: Further reforms are being called for from the traffic lights. A journalist wants to know if there is still room for it? “The budget is fully funded,” Lindner clarifies. If further relief is decided that is not provided for in the plan, the Bundestag must decide where money must then be saved.
10:29 a.m .: Without inflation compensation, 75,000 pensioners would have to file a tax return. Lindner points out that there is still no draft law for citizen income. That is currently being worked on. “I think that the citizens’ income noticeably improves people’s lives.” Space has already been created for this in budget planning.
10:26 a.m .: Relief this year will still be noticeable and further relief for burdened budgets is planned for the next, according to Lindner. The tendency is for taxes to be lowered, as in the USA and France, adds the finance minister.
10:24 a.m .: The package is considered controversial, says a journalist. “The practice of inflation compensation is never disputed,” counters Lindner. His predecessors, including Scholz, did that. It’s about a secret tax increase, he repeats. That’s why he doesn’t want to talk about a relief package: “It’s not about relief, it’s about waiving burdens.”
10:22 a.m .: The wealthy tax remains in place, the cap of the relief package is 62,000 euros, Lindner specifies.
10:21 a.m .: It is a common procedure that key points of a ministry are presented before the cabinet decision, Lindner answers a reporter’s question.
10:19 a.m .: A journalist wants to know if the package is socially unequal. Lindner rejects this and repeats the cap of just over 60,000 euros. That is one and a half times the average net income. But he also emphasizes that those who give must not be forgotten. “Tax law must remain in the middle so that it is accepted fairly by everyone.”
10.18 a.m .: Especially in the time of inflation you have to relieve, so Lindner. “Anything else would not only be unfair, but would also damage our economy.”
10.16 a.m .: Lindner emphasizes that there is relief up to an income of just over 60,000 euros. Beyond that, there are no further exemptions. “I made a conscious decision not to postpone the tax on the wealthy,” he says. And he repeats again: “This affects the broad middle of society”.
10.14 a.m .: The cornerstones are a higher basic allowance, a higher child benefit and thus a higher child allowance. “48 million people in the broad middle of society will benefit from this,” says Lindner. The average volume of an averted burden is 192 euros, according to Lindner.
10.12 a.m .: The cold progression is an additional burden on citizens only due to the development of inflation. Lindner wants to avert this with his plans. He is not politically in favor of tax increases, especially not in these times.
10.11 a.m .: 48 million Germans are threatened with a massive tax increase on January 1 because of the cold progression, while life support continues to rise. According to Lindner, these people could be further burdened with ten billion euros. “It’s not fair to raise taxes in these times.”
10.10 a.m .: “We are in a situation where action must be taken,” begins Lindner. Next year, the relief packages for the rising energy costs will be followed, so there should be an increased housing allowance and citizen’s allowance.
10:06 a.m .: The press conference begins with a slight delay. Finance Minister Lindner appears before the journalists.
According to information from the German Press Agency from ministry circles, the so-called Inflation Compensation Act provides for child benefit to increase in two stages and also be standardized. In the coming year, there will be 227 euros per month for the first, second and third child. From the fourth child, 250 euros are added to the account. In 2024, the rates for the first to third child are to be raised again – to 233 euros. “Employees and low earners, pensioners and the self-employed, students with taxable part-time jobs and above all families benefit,” wrote the FDP politician in a guest article for the “FAZ” (Wednesday).
At the same time, Lindner’s draft provides for an increase in the basic allowance, i.e. the income up to which no tax has to be paid. The Finance Minister wants to raise this limit from the current EUR 10,347 to EUR 10,632 in the coming year and EUR 10,932 in 2024.
Other key values of the tax rate will also be shifted in order to compensate for the effect of the cold progression. This is a type of creeping tax hike, when pay rises are eaten up by inflation but still result in higher taxation. Higher taxes then apply, although purchasing power does not increase in real terms.
“A tax system that taxes people who are already suffering from high prices is not fair,” wrote Lindner in the “FAZ”. Eliminating this is “not a patronizing act, but necessary in several respects”. 48 million taxpayers benefited from his plans.
In order to mitigate the effect, the top tax rate should in future only apply to higher incomes – specifically at 61,972 euros in the coming year and at 63,515 euros in 2024. Lindner does not want to touch the limit for the even higher tax rate for the wealthy.
There is already widespread criticism of the plans: in absolute terms, top earners benefited more from Lindner’s relief than low earners. The Greens in the Bundestag therefore consider the plans to be socially unbalanced.
“High and highest income groups would receive more than three times as much as people with low incomes, who actually need the relief most urgently,” said parliamentary group leader Andreas Audretsch of the German Press Agency. In addition, people with very small incomes would not be relieved at all because they paid no income tax below the basic allowance. The financial policy spokeswoman, Katharina Beck, made a similar statement. “It would be the other way around: strong shoulders would have to carry more than low-income ones and not be disproportionately relieved,” she told the editorial network Germany (RND/Wednesday).
In fact, Lindner’s plans have a greater percentage effect on low incomes, but in absolute figures people with high incomes benefit more clearly. A taxpayer with taxable income of 20,000 euros is to be relieved of 115 euros. With an income of 60,000 euros, the relief according to figures from the Ministry of Finance is already 471 euros. With even higher incomes, they remain stable at 479 euros and do not rise any further.
FDP General Secretary Bijan Djir-Sarai dismissed the Greens’ criticism as unfounded. The adjustment aims at lower and middle incomes and lowers “the tax burden of the hard-working middle”. The relief amount is capped for top earners. “The relief is fair and necessary so that people benefit from a wage or salary increase despite the high inflation and do not have to pay a higher tax burden,” said Djir-Sarai of the German Press Agency.
The Federal Statistical Office will be announcing details on the development of consumer prices in July this Wednesday. According to preliminary data, the annual inflation rate for the month was 7.5 percent. In June, consumer prices rose by 7.6 percent year-on-year and by 7.9 percent in May.
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