It could be so simple: while the federal government puts together one complicated relief package after the next, Austria simply transfers money to its citizens’ accounts. Why can’t we do that? A search for clues in the depths of German bureaucracy.
In Austria they were a bit faster than here. At the beginning of September, the government in Vienna gave all adult citizens a “climate and anti-inflation bonus” of 500 euros, and children received 250 euros. If you had a current account number in the Austrian version of the Elster tax portal or if you were already receiving benefits from the state pension fund, the money was simply transferred to your account.
Finance Minister Magnus Brunner (ÖVP) said in August that they are working flat out on financial relief options in order to get the inflation and the energy crisis under control. “Whenever possible, we prefer financial aid.” The direct payments even came a month earlier than planned: because the employees of the authorities involved “have been working under high pressure on the implementation in the past few weeks,” said Climate Protection Minister Leonore Gewessler (Greens), the 500 euros could be transferred in September instead of in October.
In September, almost nine million Austrians received urgently needed help from the state in this way: Quickly, easily, as a direct transfer to an account. The German aid instruments seem much more cumbersome: for example the price brakes on electricity and gas, complicated interventions in the market with unclear side effects, for which it is not yet clear how they are supposed to work. In the USA, too, during the Corona crisis, citizens received three checks from the state for a total of 3,200 dollars to boost the economy.
Why don’t we do it like the Austrians and the Americans? Why don’t we just transfer money instead of tying up big “relief packages”?
Anyone who puts this question to Brunner’s German colleagues will certainly get a different answer than in Austria. “It sounds so easy,” said Finance Minister Christian Lindner (FDP) at a press conference at the end of August. “You would – maybe I too, a year ago – simply say, oh yes, let’s just do it. No, no! It’s more complicated.” The state cannot simply say, “we press a button” and then it can transfer money directly to its citizens.
The fact that this magic button doesn’t exist has a bit to do with German federalism, a bit with data protection and a bit with the lack of digitization in the German administration. The fundamental problem is that there is no state authority where all the citizens’ account data are stored in one place. Instead, this data is distributed across many different places: at the tax offices, for example, or at employers, or at the family and social insurance funds.
So if the state uses one of these one-off payment channels, there will always be millions of people who fall through the cracks. In September, for example, only employees received the energy price lump sum of 300 euros because the lump sum was paid out via their salary. The pensioners are to follow in December, via the pension fund.
But with students, for example, the authorities are faced with a huge problem: the state simply does not have their account numbers. Students usually do not have a permanent employer and usually do not receive any social assistance. At the federal and state level, heads are currently spinning as to how to get the money into the hands of the students. A payment can therefore not be expected until the beginning of 2023 at the earliest, the “Spiegel” reported in September.
The traffic light government urgently needs a solution if it wants to keep one of its key election promises: climate money. In doing so, the state returns the additional income it collects from the CO2 tax on fossil fuels to the population. Every citizen receives the same amount. The highlight: Those who use little petrol, for example, receive more money with the climate bonus than they had to pay with the CO2 tax – this should motivate them to save. The experts call this the “steering effect”.
But if you want to pay out the climate money to all citizens, you first need all the account details. So what to do? The traffic light government wants to solve the problem with the so-called “tax ID”, which is usually required for the tax office. The advantage: All citizens receive the ID at birth, and the numbers are also stored at the Federal Central Tax Office (BZSt). The ID also contains other data that make it easier to assign, such as gender, date of birth and the last known address.
So if you linked the tax ID with the account number, the state would have a gigantic database through which it could easily transfer money to every citizen. According to a feasibility study by the Speyer University of Administrative Sciences on behalf of several nature conservation associations, the tax ID is “almost ideal for setting up an authorized database for the climate premium”.
But this connection is – of course – not so simple. First of all, the relevant law must be changed. The draft is already in place as part of the so-called “Annual Tax Act 2022”, but still has to be passed by the Bundestag and Bundesrat. And, much more complicated: The state has to collect all account data and assign it to a tax ID. To do this, an authority must first be found that will take on this task. And this authority then has to look for the account numbers from family benefits offices, pension funds, banks, tax offices and employers.
“Now we are a few Germans,” said Lindner at the press conference at the end of August, “these are a few Ibans that you have to collect.” Integrating all of that “it just takes 18 months,” added the finance minister and moved rely on the experts at the Federal Central Tax Office. And that’s not all, according to Lindner: “According to the figures available to me, the public administration would currently only be able to carry out around 100,000 transfers per day with its IT. Now think how many Germans we are! How long does that take then?”
Such an undertaking is complex, of course. But does it all really take that long? 18 months, with only 100,000 transfers a day? Experts assume that it can also be done faster. A study by the climate research institute MCC Berlin estimates the time required at around six to nine months, “given the drama of the situation maybe even faster.”
Anyone who asks the Ministry of Finance and the Federal Central Tax Office will receive a joint answer from the two authorities, which is rather vague. “It is not yet possible to make a concrete statement as to when a direct transfer using the IDNr database will be available,” says a spokesman for the Ministry of Finance. Because as long as there is no legal framework for collecting the account data – that is, as long as the law has not yet been changed – the state may not start with it either.
When asked whether the public administration can really only make 100,000 transfers per day, as Lindner says, the two authorities did not answer. But experts doubt that. After all, there is already an authority in Germany that handles millions of transfers a month: the Familienkasse.
Some studies therefore advocate using the payment channels that are already available instead of relying on the complex plan with the tax IDs. “Almost half of the population already has a direct payment relationship with the family coffers alone,” argues a study by the Kopernikus project Ariadne in Potsdam. “A further 32 million people can be included via data exchange with tax authorities.” The rest, such as students, just have to be written to and asked to hand over their account data.
The example of Austria has also shown that: There will always be groups that fall through the cracks. In the Alpine country with almost nine million inhabitants, there were 1.2 million people who either did not have an account or whose data was not known. The solution: vouchers that are sent by post. These can be redeemed in 26,000 shops across the country or exchanged for cash at the Austrian Postbank. It’s complicated and expensive – but there wasn’t a better solution, the government in Vienna argued.
