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Global Economy

How the citizens should be relieved

Because of the rising energy prices, the federal government has launched a number of relief measures: tax and social support measures. Since gas prices, for example, will continue to rise, the traffic light coalition is planning further measures.

First package: heating cost subsidy and EEG surcharge

According to the Federal Ministry of Finance, this will save consumers a total of 6.6 billion euros in electricity costs. Recipients of housing benefit received and still receive a one-time heating subsidy of 270 euros (two-person household 350 euros / BAföG recipients 230 euros).

The increase in the employee allowance by EUR 200 to EUR 1,200 retrospectively as of January 1, 2022 brings tax relief. The basic allowance was also increased – by EUR 363 to EUR 10,347. Long-distance commuters benefit from the increase in the distance allowance (from the 21st kilometer) to 38 cents.

Second package: 9 euro ticket and fuel discount

The measures in the second relief package launched in the spring are also intended to support citizens in the face of high energy costs – quickly and unbureaucratically. The monthly pass (9-euro ticket) for local public transport, which was introduced for a limited period of time, became a box office hit. Motorists benefit from the temporary reduction in the energy tax rate for petrol by 29.55 cents/liter and for diesel by 14.04 cents/liter (tank discount).

Various one-off payments promise further relief: a flat-rate energy fee for all employed persons who are subject to income tax of EUR 300, a child bonus for families of EUR 100 per child and one-off payments for recipients of social benefits (EUR 200) and for recipients of unemployment benefit 1 (EUR 100 Euro).

More tax relief

With the fourth Corona Tax Assistance Act, further tax relief was implemented, which affects either citizens or companies. The measures include the option of offsetting losses of up to ten million euros against profits from previous years (extended loss account) and extending the declining balance depreciation by one year. The law also provides for tax-free grants for short-time work benefits, an extension of the home office flat rate, tax exemption for corona care bonuses of up to 4500 euros and the extension of the deadline for tax returns for the years 2020, 2021 and 2022.

What further measures will surely come?

The federal government is planning further relief measures for the near future. Nothing has been decided yet, but it is already clear that the measures will not apply equally to everyone, but will be tailored to needy sections of the population.

In July, Chancellor Olaf Scholz (SPD) announced a major housing benefit reform for the beginning of next year. It is intended to relieve low-income citizens in view of the high energy prices. For example, heating cost subsidies are to be permanently integrated into the housing allowance. The aim of the reform is to expand the circle of eligible households. Pensioners in particular, who make up a large part of the housing benefit recipients, should benefit. Students can also count on support. Details of the reform are still to be discussed and prepared.

Federal Finance Minister Christian Lindner (FDP) spoke out in favor of the fact that older people with a small pension who live in their "own house" should also be considered. The chief treasurer believes that financing the reform is fundamentally feasible.

It is already certain that citizen income is to be introduced on January 1st. It will replace Hartz IV. A concept presented by Federal Minister of Labor Hubertus Heil envisages that the unemployed will be allowed to keep more assets if they want to take advantage of social benefits. In contrast to Hartz IV, no one should have to leave their own apartment in the first two years because it is too big or too expensive. Within the traffic light coalition, there are still arguments about central points, such as the amount of basic security. Here, too, the details have not yet been fully clarified, but Chancellor Olaf Scholz promised "substantial relief for those who have the least".

Which measures are under discussion?

Gas prices continue to rise on the world market. In order to protect importers like Uniper from bankruptcy, the companies are allowed to pass on the additional costs in the form of a levy to households and industry despite existing contracts. Households should therefore in turn be relieved. The details of this are not yet clear. Federal Finance Minister Christian Lindner (FDP) intends to present proposals on this soon. He has already brought up an increase in the commuter allowance and the reduction of the cold tax progression. The Greens co-boss Ricarda Lang, on the other hand, pleaded for relief from which Hartz IV recipients and other people with low incomes should benefit.

There is a broad discussion about a follow-up offer for the extremely popular 9-euro ticket. There are numerous proposals, but the federal and state governments are still at odds over funding.

The government also wants to review the rules on protection against dismissal so that tenants who are overwhelmed cannot have their rental contracts terminated or energy customers can have their supply contracts terminated.

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