Coalition Committee agrees on stimulus package - page 1

The leaders of the CDU, CSU and SPD have agreed on a stimulus package worth billions to alleviate the economic crisis caused by the coronavirus pandemic. The 130 billion euro package is designed to help families, workers, businesses and municipalities financially in the face of the burden of the coronavirus pandemic. According to Chancellor Angela Merkel, the federal government will allocate 120 billion euros. New debt would have to be raised to cover expenditure.

The financially hard-hit municipalities receive billions in aid from the federal government because of the Corona crisis. Losses in trade tax revenue from the federal and state governments can be offset together.

In addition, citizens and companies should be relieved of electricity costs. To this end, the EEG surcharge for the promotion of green power plants is to be reduced from 2021 through grants from the federal budget, as is apparent from the decision paper.

Families should also receive financial support from the state. The heads of Union and SPD have a one-time child bonus of 300 euros per child, which is to be paid out with child benefit. 

VAT is reduced to 16 percent

In the package, the government parties also agreed to cut VAT. From July 1 to December 31, 2020, the VAT rate is to be reduced from 19 percent to 16 percent and for the reduced rate from 7 percent to 5 percent, according to a decision paper available to the German Press Agency on Wednesday.

Representatives of the Union and the SPD had been negotiating the aid package in the Chancellery since Tuesday afternoon in around 20 hours. After a nightly break and the cabinet meeting, the Union and SPD continued negotiations on Wednesday morning. Participants described the discussions as very tough and difficult due to large differences in content.