Finance Minister Christian Lindner (FDP) is determined to return inflation-related additional income from the Treasury to the citizens.

The politician reaffirmed this goal when he presented the results of the new tax estimate on Thursday.

By 2026, the federal, state and local governments can expect a good 126 billion euros more than predicted in May.

“In principle, a finance minister can be happy about additional income.

But the part of the additional income that is due to inflation and not to an increase in their economic power, we want to forgo that part of the additional income," he said.

Manfred Schäfers

Business correspondent in Berlin.

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You don't want people with higher wages due to inflation to slip into a higher tax rate.

"The state must not benefit from rising wages that do not even prevent a loss of purchasing power," emphasized the minister.

The adjustment with the planned Inflation Compensation Act will therefore have to be higher.

This will result in correspondingly higher revenue shortfalls for the state.

Specifically, Lindner announced an increase in the basic allowance by EUR 561 next year to EUR 10,908 and EUR 564 in the following to EUR 11,472.

The child allowance will first increase by 404 euros to 6024 euros and later by 360 euros to 6384 euros.

Similarly, the other benchmarks of the income tax rate would be increased at the same time.

As the FDP chairman pointed out, this amendment to the Inflation Compensation Act will result in significant revenue shortfalls for the state.

He put this at 15.8 billion euros next year and then 30 billion euros annually.

This means that a significant part of the additional income from the tax estimate will be returned to the citizens.

According to the finance minister, there is no new scope for additional spending as a result of the current tax estimate.

According to the tax estimate, the federal government can expect additional income of 4.5 billion euros next year.

If you include the Annual Tax Act and the Inflation Compensation Act, which still needs to be improved, the result would be a minus of 7.4 billion euros.

The group of appraisers did not take these measures into account, since they always work on the basis of the applicable law.

The interest rate decision of the European Central Bank will also have to be incorporated, said Lindner.

The federal government has so far earmarked around 30 billion euros for 2023 to finance its debt.

That should now be a little more, said the minister, who once again vowed to his intention of working within the framework of the debt rule again next year.

Because the economic situation has deteriorated compared to the summer, the cyclical component in the debt rule allows for slightly larger borrowing.

Lindner left it open whether he intends to fully exploit the framework.

SPD parliamentary group leader Achim Post judged that the room for maneuver that is emerging in the long term should be used to finance the projects anchored in the coalition agreement.

"In particular, basic child security must be included in the financial planning in a timely manner." The Greens budget politician Sven-Christian Kindler indicated for his group that he wanted to use part of the additional income for new spending.

He said it was right to support the population and economy now in the face of the recession and fossil fuel inflation and to invest in a climate-neutral future.

"We have to use additional leeway to invest in our future and thus also secure future tax revenues."

The opposition warned that the projected additional revenue should actually be used to relieve taxpayers.

"It is important to contain the stress shocks for citizens and companies as much as possible," said the budget spokesman for the Union faction, Christian Haase.

In order to prevent the loss of prosperity from becoming even greater, the "winter gap" with the additional income must be closed.

"Here I would like to see a similar zest for action and determination analogous to circumventing the debt brake," said the CDU politician.

The German Association of Cities warned against illusions.

"The results of the current tax estimate do not mean that the financial situation of the cities and communities is improving," stressed , Managing Director Helmut Dedy.

The cities are also massively affected by the rising prices.

The cities would only have more on paper.

In reality, however, they could buy less.

The taxpayers' association warned that reducing the cold progression in the income tax rate was not enough.

The interest group called for allowances and lump sums in tax law to be adjusted to the devaluation of the currency.

"Some flat rates have not been adjusted for more than 50 years," said its President Reiner Holznagel.