Energy Prices and Pandemic
Billions of dollars in relief for citizens
“More money for citizens in their wallets”: Christian Lindner. Photo: Christoph Soeder/dpa
© dpa-infocom GmbH
High energy prices are a burden for many households, and there are also the effects of the pandemic. The state wants to help. At the same time, finance minister Lindner makes it clear: the funds are finite.
In view of the increased energy prices and the consequences of the corona pandemic, citizens and companies in Germany should be financially relieved.
“We secure more money in the wallets of the citizens, and we secure liquidity for the companies,” said Finance Minister Christian Lindner (FDP) in the Bundestag. “In this way, we are supporting confidence in good economic development in the long term.” The Bundestag dealt with the coalition’s plans for the first time. Meanwhile, the Federal Council approved a one-off heating subsidy for millions of people.
A planned tax relief law provides for raising the employee lump sum for income tax as well as the basic allowance. The increase in the commuter allowance for long-distance commuters, which is actually only due on January 1, 2024, is to be brought forward and amount to 38 cents retroactively to January 1. This measure is limited until 2026. The flat rate is currently 30 cents up to the 20th kilometer and 35 cents from the 21st kilometer
Even before the start of the Ukraine war, the traffic light coalition had agreed on an initial relief package in view of the rise in energy prices.
“The resources of the state are finite”
Lindner said that in view of a situation characterized by a high level of uncertainty, it was imperative for economic and political reason to strengthen growth in Germany, counter inflation risks and cushion hardship. “But one thing is part of honesty: the state’s resources are finite, and in this situation it must not exhaust itself fiscally.”
The coalition has now agreed on another relief package. This provides for an energy flat rate. There are also plans to make tickets for buses and trains cheaper: for 90 days, a ticket for 9 euros per month is to be offered on local public transport throughout Germany. It is not yet clear when this ticket will start.
Federal Council allows heating cost subsidy law to pass
The Bundestag also debated tax relief in the corona pandemic for the first time. Lindner emphasized that the degressive depreciation for so-called movable assets should be extended by one year. The plans also stipulate that employees should also be able to claim a home office flat rate in their tax return for this year.
The Bundesrat passed a law on heating subsidies that had already been passed in the Bundestag. Millions of people in Germany receive a one-time heating subsidy because of the high energy prices. A one-person household that receives housing benefit should receive EUR 270, a two-person household EUR 350, and each additional family member receives EUR 70. Students and trainees who receive state aid are entitled to a one-off payment of 230 euros.
The aid had already been decided before the war in Ukraine, but originally with significantly lower amounts. Because energy prices have risen significantly since then, the SPD, Greens and FDP have increased the subsidy. According to the Federal Ministry of Housing, around 2.1 million citizens, such as pensioners, single parents or people who earn little, will benefit from this. The money should be transferred directly to the accounts without an application.
The CDU financial politician Fritz Güntzler called the tax cuts proposed by the federal government “creative, discouraged and unambitious”. The Union proposes that taxpayers could carry back losses for three years in order to be able to offset them against the profits from the pre-Corona year 2019. “On the other hand, the two years proposed by the traffic light do not help the companies affected by the crisis, since the losses carried back to the Corona year 2020 are not offset by any corresponding profits.”