Editor in chief at IamExpat Media
Alongside reaffirming his goal to return Germany to the debt brake, Finance Minister Christian Lindner has unveiled far-reaching tax breaks for the coming year, to help relieve individuals and businesses.
“In this legislative period we will significantly relieve people and small and medium-sized businesses by significantly more than 30 billion euros,” Lindner announced in an interview with Bild am Sonntag over the weekend.
He explained that part of the tax relief will come from making contributions to pension insurance entirely deductible on annual tax returns. Currently, they are only partially deductible. Lindner is also looking to entirely abolish the EEG surcharge from 2023. This tax on the price of electricity in Germany was already significantly reduced at the beginning of this year to help shield households from rising energy prices.
Lindner also said that he was drafting a COVID Tax Act, designed to help businesses that have been negatively impacted by the coronavirus pandemic. “A number of relief measures will be created or expanded in it,” he said. For instance, the law would allow businesses to offset losses from 2022 and 2023 against profits in previous years. “Nobody should be driven to ruin by tax debts during the pandemic.”
The new finance minister further reaffirmed his intention to once again adhere to the debt brake from 2023. This legal clause places a limit on how much the federal government can borrow, but was scrapped in March 2020 as ministers sought extra funds to help the country weather the coronavirus crisis.
Returning to the debt brake was one of the key pledges of Lindner’s FDP party during the federal election and a non-negotiable in coalition discussions with the SPD and the Greens. “We must return to sound public finances,” Lindner told Bild.
He therefore urged other ministers in the federal government to be thrifty in the coming months. “The margins are tight in 2022,” he said. “So only the prosperity that was previously generated can be distributed.”
In particular, Lindner is calling for plans for a new 50-million-euro government terminal at the main airport in Berlin to be scrapped. “I do not consider a new building for state guests and ministers to be necessary,” he said. “Abandoning this would be the signal that we are careful with taxpayers’ money.”
Image: photocosmos1 / Shutterstock.com