Status: 08/11/2022 07:56
“Economic savant” Grimm thinks Lindner’s tax reform came at the wrong time. Others consider them “unbalanced”. The finance minister defends his plans against criticism – and has the backing of Chancellor Scholz.
Federal Finance Minister Christian Lindner’s plans to relieve taxpayers are not timely, according to “wise businessmen” Veronika Grimm. “A reform in which the highest earners nominally earn the most comes at the wrong time,” Grimm told the Rheinische Post. In principle, it is correct to compensate for the so-called cold progression and relieve the environment of society in view of high inflation.
“On the other hand, we currently need relief, especially for middle and low incomes, who cannot bear the difficulties caused by price increases alone,” said the Advisory Council member on the assessment of general economic development.
You have to try to alleviate low- and middle-income groups in a targeted way, right down to the middle of society. “Relief from the watering can, such as a tank discount or VAT reduction, are not appropriate,” advised economist Erlangen.
Greens and SPD: Plans are ‘socially unbalanced’
According to Lindner, he wants to relieve 48 million citizens of taxes. Overall, they should save more than ten billion euros over the next year, as the FDP politician announced yesterday. In addition to an income tax rate adjustment, child allowance and family allowance must also be increased.
The two coalition partners, the Greens and the SPD, regard Lindner’s plans as socially unbalanced. The minister, however, argued that the proposed tax cuts were limited. “Additional relief ends at an annual income of €62,000 – or there is no further benefit thereafter.” That’s about 1.5 times the average income in Germany. According to Lindner’s plans, the maximum tax benefit for an individual is €479 next year.
Critical voices multiply
The head of the German Institute for Economic Research (DIW), Marcel Fratzscher, described the plans in the daily threads as “very unbalanced”. “70 percent of that goes to the 30 percent with the highest incomes,” he said. “Low-income people who pay little or no income tax get virtually nothing out of it.” These people are particularly affected by inflation.
The German Association of Cities warned of tax losses in the billions and asked for compensation for the municipalities. Managing director Helmut Dedy told dpa news agency that Lindner’s plans against cold progression would also result in fiscal deficits for municipalities of around €4.2 billion in 2023 and 2024. , therefore, ensure that cities receive the necessary funds despite the tax exemption”.
Lindner defends his tax plans
Lindner defended his tax plans against criticism. “Strong shoulders will continue to carry a big burden. But they will no longer be burdened. And above all, we will ensure that people who don’t really have broad shoulders suddenly pay more taxes due to inflation.” It was a “pure inflation adjustment”, the head of the FDP said in the ZDF’s “heute journal”.
He referred to other measures by the traffic light coalition targeting low-income people. That’s what he called the aid packages that have already been decided, with a one-time payment for Hartz IV recipients and a heating subsidy for housing aid recipients. He also recalled the coalition’s plans for a housing benefit reform and the conversion of the Hartz IV into a new “citizen’s allowance”.
“Basic Benevolence”
SPD leader Lars Klingbeil signaled approval. “The fact that we have to spend a lot of money to get people through the crisis sends the right signal,” he said on the morning show shared by ARD and ZDF – although he had different ideas from the finance minister on how small and medium-sized businesses earn incomes. reduced could become. “Now it’s a matter of clarifying in detail how we can do this concretely and quickly.”
Linder also receives support from Chancellor Olaf Scholz. The chancellor views the proposals with “fundamental goodwill”, said government spokesman Steffen Hebestreit. He made it clear that the plans should be seen as part of a larger overall concept that must be developed in the coming weeks in light of huge cost increases, for example for energy. According to Hebestreit, departmental coordination is starting now. The concept will be developed in such a way that it finds the necessary support from the cabinet.
Hebestreit referred to Scholz’s statements that citizens should not be left alone with rising prices. In his previous role as finance minister, Scholz corrected the cold progression twice. This fix is now pending for the third time.
“We’re not going to let people down,” Lars Klingbeil, Federal President of the SPD, on Lindner’s tax plans
Tagesschau 09:00 am, 11.8.2022