Politics News: Bundestag approves tax cuts in the billions

On Thursday, the Bundestag decided on the next package of measures intended to relieve the population financially in the face of war and the pandemic.

On Thursday, the Bundestag decided on the next package of measures intended to relieve the population financially in the face of war and the pandemic. Image: dpa central image / Britta Pedersen

Jannik Sauer

The war in Ukraine is dominating the national and international headlines. But there are also important domestic political decisions to be made. First, there’s the groundbreaking upcoming one state election in Germany’s most populous state, North Rhine-Westphalia. And the next few days will also be exciting at the federal level.

Because of the high price increases, the Bundestag decided on Thursday to provide relief for citizens, specifically surcharges for families and low-income households, tax breaks and an increase in the basic tax-free allowance.

On Friday, the parliamentarians will deal with the abolition of the advertising ban for abortions, the suspension of Hartz IV sanctions and a reduction in the energy tax on fuel.

You can find out everything you need to know about domestic politics here in the news blog.

12th of May

6:37 p.m .: Bundestag decides on tax relief in the billions

On Thursday, the Bundestag decided on several tax cuts to compensate for the high energy and food prices. In this year alone, citizens should save almost 4.5 billion euros, and by 2026 the relief should add up to around 22.5 billion euros. The opposition criticized that this was not enough in view of the rising inflation.

Specifically, the basic allowance for income tax will be increased from the current EUR 9,984 to EUR 10,347. This should apply retrospectively to January 1st. The basic allowance is the income limit above which you have to pay income tax in Germany.

Also retroactive to January 1, the flat rate for long-distance commuters will be increased by three cents to 38 cents per kilometer. The step had already been decided for the years 2024 to 2026, but should now also apply to 2022 and 2023. The flat rate for advertising expenses will also be increased from 1,000 to 1,200 euros.

The relief will only be felt in the wallet after the tax return for 2022, i.e. in the coming year. Union, AfD and left criticized that the steps were too small, too late and untargeted.

6.32 p.m .: Bundestag applications for restriction of former chancellor privileges

Make because of his Russia contacts CDU and CSU further pressure on former SPD chancellor Gerhard Schröder. On Thursday, the Union faction submitted a motion to the Bundestag dealing with legal reactions to the Russian war of aggression. Among other things, it provides for the pension entitlement of former members of the government to be canceled if they cause “considerable damage to the country’s reputationby interceding for the interests of a foreign state”.

The legal policy spokesman for the Union faction, Günter Krings (CDU), criticized Schröder for his relations with the Russian President Wladimir Putin. By publicly showing understanding for the “warmonger in the Kremlin,” he is undermining Russia’s international ostracism, Krings said, emphasizing: “The behavior of this former chancellor is massively damaging to Germany’s reputation.” Schröder has been heavily criticized for not giving up his posts for the Russian energy companies Gazprom and Rosneft despite the attack on Ukraine.

5.30 p.m .: The cabinet decides on an immediate surcharge for children and a one-off payment

Poorer households will receive financial relief from July. On Thursday, with the votes of the traffic light groups, the Bundestag decided on the so-called immediate surcharge for children and young people from poorer families and a one-off payment for adults in particular need.

Children and young people in families who depend on social benefits will receive 20 euros more per month from July. The maximum child allowance increases from up to 209 to up to 229 euros per month per child. The surcharge is primarily intended to support parents whose income is not sufficient for the entire family.

A one-off payment of EUR 100 was agreed for adult beneficiaries. It should be received by anyone who receives benefits under Book II or XII of the Social Code, under the Asylum Seekers Benefits Act or the Federal Welfare Act. The grant is to be paid out in July 2022. The money is intended, among other things, to compensate for additional corona-related burdens.

3:14 p.m .: In 2022 around 40 billion euros more taxes than expected

Despite the war in Ukraine and the ongoing corona pandemic, the federal, state and local governments can expect tax revenue to be EUR 40.4 billion more this year than expected in November. As the Ministry of Finance announced on Thursday in Berlin, the tax estimators also assume that the state will take in around 220 billion euros more than expected by 2026.

2:25 p.m .: Union demands stricter action against the consequences of high inflation

The Union has encountered resistance from the traffic light parties in the Bundestag with a push to combat high inflation. Their representatives pointed out that the coalition had already decided to relieve citizens of billions. “The traffic light government is acting,” said SPD financial politician Michael Schrodi and also named the relief package that the Bundestag wanted to adopt in the evening. “There is a total of 30 billion euros that we are getting under way.” Union parliamentary group leader Jens Spahn admitted that the government was doing something about the “energy price driver”. “It’s just too little, too late and too bureaucratic. That’s the problem.”

In its application, the Union called for the so-called cold progression to be eliminated. There must be tailor-made relief for the high energy prices for citizens who are particularly affected. In order to reduce price pressure on goods, trade agreements that have already been negotiated, such as Ceta with Canada, should be implemented and new agreements concluded with the USA, Great Britain and other regions. The set-aside of arable land should be avoided for the time being. In addition, the government must again comply with the debt brake.

12.50 p.m .: Habeck promotes the energy transition: “We’re running out of time”

Federal Economics and Climate Protection Minister Robert Habeck urgently advocated a faster conversion of energy production to electricity from renewable sources such as wind and sun. “We mustn’t lose sight of the big horizon,” he said on Thursday in the Bundestag in Berlin, referring to forecasts by the World Weather Organization that the 1.5-degree mark could be exceeded for the first time in the coming years. The world community wants to limit global warming to 1.5 degrees compared to the pre-industrial age.

This should perhaps not happen permanently, said Habeck. “But this maybe depends to a large extent on human activity, on political decisions. In other words, time is running out on us, it’s literally running out on us.” The war in Ukraine with its dead is terrible, but at the same time disasters are looming in other places due to crop failures as a result of climate change. “We have the chance to work against it and we are doing it with this legislative package that we are introducing today.” It is the largest energy market reform in decades.

10:34 a.m .: According to Lindner, the state has little additional leeway this year

According to the Federal Minister of Finance, the state will have little additional financial leeway this year, even if the tax estimate is good. “This year the state, the federal government, will have little additional leeway,” said Christian Lindner (FDP) in the ARD “Morgenmagazin” on Thursday. For technical and legal reasons, the relief package for citizens has not yet been included in the tax estimate that he will present on Thursday, because the Bundestag is still deliberating on it this week.

“I have less income than the tax assessor could calculate,” said Lindner. This is also related to the fact that the relief packages are still “in delivery”, so to speak. In the afternoon, Lindner will present the results of the spring tax estimate. Significant additional income is expected for the federal, state and local governments. According to the submission by the Ministry of Finance for the Working Group on Tax Estimation, additional income of 232 billion euros is expected by 2026 compared to the estimate from last November.


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