Germany promises a 30 billion tax cut

Correspondent in Berlin



German Finance Minister Christian Lindner has congratulated taxpayers for the year with the announcement of a reduction in taxes for citizens and companies of more than 30,000 million euros in the coming years. It also promises aid measures for companies that have been severely affected by the crisis caused by the pandemic. «The 2022 budget is still made up of the previous government, but my draft for 2023 will already contain the relief», Has advanced the leader of the Liberal Party (FDP) in his first interview in office, granted to 'Bild am Sonntag'. Going into detail, this tax reduction will mainly affect taxes related to pension insurance contributions and will contain the elimination of the EEG surcharge on the price of electricity.

"In this legislative period we are going to relieve people and medium-sized companies by significantly more than 30 billion euros," defined Lindner, announcing a new "coronavirus tax law" based on the tax relief of SMEs, the self-employed and families "I know create or expand a series of aid measures"He added about his strategy, and pointed out that the losses to the state coffers in 2022 and 2023 should be offset by the gains in previous years, in which Germany repeatedly posted a surplus. "No one should be ruined by tax debts during the pandemic," formulates the guiding principle of his policy, while urging the other government ministers of the "traffic light coalition", led by the social democrat Olaf Scholz, to be more thrifty than never. "The room for maneuver is tight in 2022," he warns, which is why he instructs his colleagues in the cabinet to "prioritize their projects and put previous spending to the test."

The debt brake, which is contained in the German Basic Law and has been temporarily suspended to face the economic consequences of the pandemic, will be applied again from 2023, "so that only the prosperity that was previously generated can be distributed" . In these statements there is a critical evening to the rest of the German ministers that, since they were sworn in on December 8, they have already hired more secretaries of state than ever before in the history of the Federal Republic, 37 more than the old government, which has caused a first public complaint from the Federation German Taxpayers.

Lindner aims to cut down on badly needed state spending. As an example, it has already requested the abandonment of the planned construction of a representative government office at Berlin BER airport, at a budgeted cost of € 50 million. "I do not consider a new representative building necessary for guests and official visits and I hope that the Ministry of Foreign Affairs will change its previous opinion on this matter," he said. Lindner suggests that the old transitional building continue to be used permanently and notes that a change in plans "would be a sign that we are careful with taxpayers' money."

With this announcement, Lindner takes several steps beyond the coalition agreement that his party has signed with Social Democrats and Greens, which included the intention of don't raise taxes but he said nothing about tax cuts, so he managed to put the internal discussion on tax matters on the table. “I already said before the elections that our proposal to cut taxes does not have to be carried out immediately. The decisive thing is that after a decade in which the fiscal burden and the bureaucracy have increased, there is now a paradigm shift and we enter into relief and reduction of the bureaucracy, ”Lindner justified the concession.

Lindner has sought synergies with the electoral programs of his government partners and has found, for example, that he agrees with Los Verdes on the need to make more investments in education. To get the funds, he proposes a reduction in subsidies that specifically targets the automobile industry and uses companies with state participation, such as Deutsche Telekom, as levers to boost investments.

To meet the costs of economic reactivation and return public debt to the constitutional fold, while carrying out a significant tax cut, Lindner intends to complete the transformation and climate fund using credit authorizations that were actually intended to combat the pandemic but are no longer needed. The federal government assumed a total debt of 240,000 million euros in 2021, but only 180,000 million were consumed, which frees 60,000 million of loans in reserve. The funds will be used for climate-friendly financial projects in the coming years, a reallocation not without controversy, according to the president of the Federal Audit Office, Kay Scheller, who has criticized this millionaire parking in reserves for future investments in order to have them available in subsequent budget years. "Normally, the loan requirement for this year would simply have been lowered if the money was not needed," Scheller says, "rather than taking on the debts anyway to have room for maneuver for the future." In the 2021 budget, a record debt of 240,000 million euros is estimated.

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