The Inflation Compensation Act increases the minimum exempt from making the income statement and will give more subsidies per child
Federal Finance Minister, Liberal Christian Lindner, announced on Wednesday an initiative to compensate for high inflation and tax relief for German citizens, mainly through an increase in the tax-free base amount and more financial support per child. If approved by the German lower house, the so-called inflation compensation law will benefit “about 48 million citizens, including pensioners and the self-employed,” the head of the German treasury told the press.
The average tax evasion will rise to about 192 euros per taxpayer, assured the German head of finance, who wants the average population of the country to benefit from these measures in light of the effects of inflation. “People are very concerned about inflation,” said Lindner, who emphasized that now is the time to take action given the continued rise in fuel prices, especially natural gas and food.
The liberal politician pointed out that the tax cut under consideration in his plans will exceed 10,000 million euros and avoid the so-called “cold progression”, as a latent tax increase is called in this country when salary increases are devoured by inflation and despite everything is there is a tax increase. In that sense, Lindner emphasized that his intention is to avoid “a standard tax increase”. However, his plans are contradictory in the tripartite coalition of Social Democrats (SPD), Greens and Liberals (FDP) that rules Germany.
The SPD and environmentalists are demanding specific tax breaks for the most underprivileged citizens. Lindner’s plans, which until now have been reluctant to grant tax breaks, basically benefit all those individuals or families with an annual gross income of less than 62,000 euros. “It’s not about unloading, it’s about giving up new loads,” the minister said, referring to “cold progression”. The liberal politician’s initiative was criticized as inadequate by the SPD, the main partner of the governing coalition in Berlin. “The proposed increases in the basic tax-free amount and child benefits point in the right direction, but they are not enough,” said Achim Post, vice-chairman of the Social Democratic Group, which also demanded direct payments to low- and middle-income citizens.
Andreas Audretsch, number two of the Greens in the Bundestag, stated that “these tax cuts, which benefit high-income people three times more than low-income people, are not realistic” and the opposition party The Left described Lindner’s proposal as a “joke”, since according to his parliamentary spokesman, Christian Görke, the most disadvantaged 70% of the population would not benefit at all from the measure, because because of their low income they do not even pay personal income tax.
“In absolute numbers, Lindner’s proposal benefits the highest-income citizens the most,” Görke said. The powerful German Confederation of Trade Unions (DGB) and the Federation of Taxpayers also rejected Lindner’s initiative not to tax low-income households, nor to tax the most fortunate.
Source: La Verdad
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