As of: April 1, 2024, 7:04 a.m
By: Mark Stoffers
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FDP leader Lindner wants to relieve millions. After the citizen's allowance increase, he plans to increase the basic allowance for wage and income tax.
Berlin – The traffic light coalition repeatedly speaks of relief for the economy. After the passage of the Growth Opportunities Act in a slimmed-down version, which is intended to help with pensions and income tax, among other things, with a little more tax relief, the circle could now be closed. This is apparently how Finance Minister Christian Lindner (FDP) imagines it.
Tax relief for millions of citizens: increase in citizen’s allowance too “massive and disproportionate”
Because Lindner now wants to tackle tax relief for millions of working citizens - this year. Lindner also justified this initiative by saying that citizens' money had been increased "massively and disproportionately" on January 1st due to the high inflation expectations. This must now also retroactively lead to an increase in the basic allowance for wage and income tax, said the FDP leader of the
German Press Agency (dpa)
. “We are preparing this in the legislation. This means that there will also be further tax relief for the working population this year.”
By increasing the basic allowance for wage and income tax, the Finance Minister wants to relieve the burden on millions of citizens. But his initiative has also received criticism. © IMAGO/Zoonar.com/stock photos-mg
Lindner also promised changes to income tax for 2025 and 2026. Then the so-called cold progression must be balanced out again, he said. This refers to the effect of high inflation on income tax, which would ultimately lead to a secret tax increase.
Lindern plans tax relief for millions: “If we do nothing, people would be burdened more heavily”
“If we did nothing, then people who get a salary increase that barely compensates for inflation would face a greater tax burden,” explained the finance minister.
The federal government most recently responded to high inflation for the years 2023 and 2024. Further compensation must be discussed in the context of the budget draft and financial planning, Lindner announced. Financial details will only be known in the fall, when a new progress report is available. As a rule, to compensate for the cold progression, several adjustment screws in the tax tariff are adjusted: the basic tax allowance, i.e. the income up to which no tax has to be paid, and also the limit above which the top tax rate of 42 percent is due.
Criticism of Lindner's plan for tax relief in Germany: “Absurd given the budget situation”
Budget discussions for 2025 are currently underway in the federal government. The financial scope is limited, so Lindner also wants to impose tough austerity measures on the ministries. Ultimately, a gap in the double-digit billion range in the 2025 budget needs to be closed. And this doesn't include possible tax relief for Lindner.
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And that's exactly why Lindner's plans for tax relief for millions of citizens are not finding open ears everywhere. Hamburg's Finance Senator Andreas Dressel (SPD) expressed criticism on the platform
X
, formerly
: "Every tax relief must be financeable," wrote politicians in his post. It is “absurd to think about new steps to combat cold progression, especially for top earners,” given the dramatic budget situation.