German Finance Minister Christian Lindner on Wednesday, August 10, announced plans to raise tax caps, tax-free minimum income and a modest increase in child benefits. These measures are intended to alleviate the situation of families in the face of high inflation caused by the sharp rise in food and energy prices.

Instead of direct tax cuts, it is proposed to increase the threshold beyond which the tax is paid, including the level from which the highest rate is levied. The maximum tax rate will start at €61,972 in 2023 and €63,515 in 2024, while the current cap is €58,597.

The Ministry of Finance also intends to increase citizens’ tax-exempt minimum income, which currently stands at 10,347 euros (approximately 10,550 dollars), to 10,632 euros next year and 10,932 euros in 2024. Income that does not reach the non-taxable minimum amount.

Meanwhile, subsidy payments for the first three children will increase by €8 to €227 per month. The amount of payments for the fourth child and each subsequent child will increase to 250 euros.

As a result of these measures, the German Ministry of Finance expects a reduction in tax revenues of 10.12 billion euros next year and 17.5 billion euros in 2024. At the same time, Lindner promises that some 48 million citizens will feel relief.

Criticism of the German Finance Ministry’s plan inside and outside the coalition

The plans by Linder, who is also leader of the Free Democratic Party (FDP), have drawn criticism from inside and outside the ruling coalition of the Social Democratic Party of Germany (SPD), the 90 Alliance/The Greens and the FDP.

Representatives of the “greens” called these proposals regressive, saying they provide the greatest benefits to already wealthy people. “Billions of euros, from which the upper strata of the population benefit three times more than the poor, do not correspond to the current moment”, Katharina Beck, financial spokeswoman for the Greens, told the publications of the group Redaktionsnetzwerk Deutschland (RND). . it would be the opposite – strong shoulders should bear more than those with low incomes, and they should not receive disproportionate relief.”

Franziska Giffey, the ruling burgomaster of Berlin, who is a member of the SPD, was also critical. She told the Welt news channel that tax cuts and widespread increases in child benefits will not help those most in need. “The next increase in child benefits is good for the recipients. But again, it won’t help retirees and students either,” she said.