To partially compensate for inflation and high energy prices, the traffic light put together a relief package worth billions. Most of the measures have now been approved by the cabinet.
The Federal Cabinet has introduced a series of draft laws by Federal Finance Minister Christian Lindner to implement the agreed relief package. “We are doing everything we can to relieve people and companies in this difficult, crisis-ridden situation,” he said afterwards. This applies in financial terms and with a view to annoying bureaucracy. However, it is completely clear that the state will “not be able to compensate for the high prices in the long term” and guarantee prosperity. “But we have to ensure that our country gets through this crisis well and compensate for hardships.”
In detail, the cabinet passed drafts for the Inflation Compensation Act, for a temporary reduction in the sales tax rate on gas deliveries and for the annual tax law, as well as a draft for a change in the law to support energy companies through the KfW development bank, as the FDP leader then announced.
The Inflation Compensation Act is intended, among other things, to compensate for the consequences of the cold progression in income tax. This is an effective and fair instrument from which around 48 million people benefited, said Lindner. In addition, families receive targeted tax support. “We want to do everything to ensure that the state does not benefit from inflation,” said Lindner.
After planning, the basic tax allowance will be increased and the benchmark tariff values ??will be shifted to the right. As a result, the tax burden does not increase as a result of an increase in remuneration up to a maximum of the level of inflation. The child tax allowance is to be adjusted for the years 2022, 2023 and 2024. The child benefit for the first three children will be increased to EUR 237 per month on January 1, 2023. In the autumn, in view of the new data, there will be another update.
The draft law for the temporary reduction in the sales tax rate on gas deliveries provides for the rate on the delivery of gas via the natural gas network to be reduced to seven percent from October to the end of March 2024. According to the Ministry of Finance, the federal government expects “that the taxable companies will pass this reduction on to the citizens one-to-one”. Since the gas surcharge is only levied when gas is delivered via the natural gas network, deliveries of gas via other distribution channels such as tankers or cartridges are still subject to the regular sales tax rate.
In addition, the peak compensation for electricity and energy taxes is to be extended by another year. This would relieve around 9,000 energy-intensive companies of around 1.7 billion euros. According to Lindner, companies that benefit from this peak balancing should take measures to reduce energy consumption.
With regard to the annual tax law, Lindner particularly emphasized the planned preparation of a direct payment method for future public services using the tax identification number, the extension of the home office flat rate and tax relief for photovoltaic systems. Specifically, the home office flat rate of 5 euros per day will be permanently indefinite and the maximum deductible amount will be increased from 600 euros to 1000 euros per year. In addition, in the case of a home office, more flat rates are used. The new regulation relieves citizens of an additional 1.4 billion euros annually.
With effect from January 1, 2023, tax and bureaucratic hurdles in the installation and operation of photovoltaic systems are to be removed. Accordingly, an income tax exemption will be introduced for income from the operation of photovoltaic systems up to a gross nominal output of 30 kW for single-family houses and commercial properties or 15 kW per residential and commercial unit for other buildings used primarily for residential purposes. In the future, a zero tax rate will apply to the delivery, intra-community purchase, import and installation of photovoltaic systems and electricity storage.
Other measures in the annual tax law include an increase in the linear depreciation rate for the depreciation of residential buildings to three percent of the acquisition or production costs and thus a reduction in the depreciation period from the previous 50 to 33 years. In this way, a contribution is made to supporting a climate-friendly new building offensive. The complete deduction of special expenses for old-age provision, which was previously only planned for 2025, is to be brought forward to 2023. From the 2023 assessment period, the saver’s allowance will be increased from EUR 801 to EUR 1,000 for single people and from EUR 1,602 to EUR 2,000 for spouses or life partners.
According to Lindner, the cabinet also decided on a wording aid to make it easier for KfW to support energy and energy trading companies. According to previous information from the Ministry of Finance, the federal government now wants to use the credit authorizations already created for the WSF special fund for support measures assigned to energy suppliers by KfW. This requires “a minimally invasive measure in the relevant law on the WSF,” said Lindner. According to Lindner, the resolution of a law already in parliament, to which this regulation will be attached, should take place at the beginning of October.
With a view to further company aid planned by the government, especially for medium-sized companies, the finance minister emphasized that there could be “no analogy to the corona pandemic”, in which very broad instruments were used. “We have a different situation now,” emphasized Lindner. “It’s not about increasing demand now.” Rather, it must be prevented that there is a further shortage of demand and structural breaks.
