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Finance Minister Lindner: New traffic light conflict
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Michele Tantussi / AFP
According to the “Süddeutscher Zeitung” (“SZ”), a new dispute over family policy is brewing in the traffic light coalition.
The reason is the plan by Finance Minister Christian Lindner (FDP) to increase the basic tax allowances for adults and children, but not child benefit, retroactively to January 1st.
This means that only families with top incomes would benefit from the plans.
The SPD and the Greens are defending themselves against this: if the child allowance increases, both parliamentary groups say, the same must also apply to child benefit.
In principle, the coalition agrees that the constitutionally guaranteed tax subsistence minimum must be increased in view of the sharp rise in prices and wages as well as the recent increase in citizen's benefit rates.
In the future, adults should only be prosecuted by the tax office if they earn more than 11,784 euros instead of the current 10,908 euros. For children, according to the plan, the tax allowance will increase from a total of 8,952 to 9,540 euros.
In order to ensure the subsistence level of children, the state pays parents a monthly child benefit of 250 euros per child.
However, the benefit is basically just an advance payment on the basic child allowance, which is intended to ensure that the subsistence minimum is not only exempted at the end of the year with the tax return, but on an ongoing basis.
Once the tax return is available, the tax office checks whether the child benefit already paid or the use of the tax allowance is of greater use to the family.
The allowance can lead to tax relief of up to 377 euros per month per child for top earners.
In other words, a much greater tax relief than child benefit.
Critics have long complained that the state obviously values the offspring of high-income citizens more than those of average earners.
In their coalition agreement, the traffic light partners agreed to reduce the gap between the two state benefits.
Accordingly, child benefit was recently raised slightly more in percentage terms than the tax-free allowance.
According to coalition circles, Lindner is now using this very fact as an argument to only increase the allowance this time.
Only parents with an annual gross income of more than around 110,000 euros would benefit from this.
The small success in reducing the child benefit gap would be gone again.
“But it is precisely parents with small and medium incomes who suffer particularly from the high inflation rate,” said SPD financial expert Michael Schrodi to the “SZ”.
“That’s why child benefit needs to be increased.” His Green Party colleague Katharina Beck sees it similarly.
In purely mathematical terms, an increase in child benefit of nine euros would be necessary in order to prevent the gap from the tax-free allowance from increasing again.
The fact that Lindner is stonewalling when it comes to child benefit could also have something to do with the costs, which would amount to 1.5 billion euros annually with an increase of nine euros.
Together with the constitutionally required increase in allowances for parents and children, the federal, state and local governments would face budget burdens of 3.4 billion euros.
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