23 billion euros by 2026
Lindner is planning billions in tax relief
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In the fight against cold progression, Finance Minister Christian Lindner wants to relieve the burden on taxpayers. A good 23 billion euros are expected to be saved by 2026. To this end, the basic tax allowance will be increased and the tax rates will be adjusted. “No reason to celebrate,” says the opposition.
Finance Minister Christian Lindner wants to offset the effects of high inflation and relieve taxpayers of 23 billion euros over the next few years. The plan is to adjust the wage and income tax in three steps by 2026, said the FDP leader in Berlin. Lindner wants to compensate for the so-called cold progression, a kind of creeping tax increase when a salary increase is completely eaten up by inflation but still leads to higher taxation. The “Bild” newspaper first reported on the plans.
Despite the high costs, Lindner does not see the ongoing budget discussions at risk “if the coalition strengthens economic growth with courageous impulses,” said government circles. The share allocated to the federal government has already been taken into account in the financial planning. An update is planned for the autumn when a new progression report is presented. There is currently a funding gap of around 25 billion euros in the budget plans for next year. According to Lindner's plans, the basic allowance for wage and income tax will increase by 180 euros to 11,784 euros this year, retroactively to January 1st. Up to this income there is no tax. According to the information, taxpayers will be relieved of two billion euros.
Criticism from the traffic lights
From January 2025, the basic allowance is set to increase by a further 300 euros to 12,084 euros. In addition, the income tax rate will also be postponed – this means that higher tax rates will only apply to slightly higher incomes than before. Compared to the current law, this means a tax relief of eight billion euros, it was said. A further increase in the basic allowance by 252 euros to 12,336 euros is planned for 2026. The tax rate is also to be postponed again. The annual tax relief would then rise to a good 13.3 billion euros.
However, Lindner's plans are met with criticism in the traffic light coalition. “Proposals that cost double-digit billions for the federal, state and local governments and, above all, relieve the burden on the richest in the country do not fit the times,” said deputy Green party leader Andreas Audretsch to the German Press Agency. The budget situation is extremely difficult – and the focus must now be on Ukraine and aid for the flood victims. “The damage in the flood areas will result in additional costs running into billions for the federal, state and local governments,” warned Audretsch.
The Union MP Sebastian Brehm, on the other hand, described the relief as insufficient. Lindner is just doing what he absolutely has to do according to the Basic Law. “This is unambitious and no reason to celebrate.”
