Germany plans tax changes to help households cope with inflation


Customers at the Edeka grocery store buy pasta in Duesseldorf, Germany, April 29, 2020. REUTERS/Wolfgang Rattay/File Photo

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BERLIN, Aug 9 (Reuters) – Germany’s finance ministry plans to raise income tax thresholds and slightly increase child benefits in response to the country’s highest inflation in decades, officials said on Tuesday. officials, but critics said the move benefited high earners the most.

The allowance will increase to 10,632 euros next year and 10,932 in 2024 from 10,347 euros currently, officials said. Meanwhile, the highest tax rate will come into effect from an income of 61,972 euros next year and 63,515 euros in 2023, compared to 58,597 euros currently.

Child allowances for the first two children will increase by 8 euros to 227 euros per month in 2023, officials said.

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As a result, tax revenue is expected to decline by 10.12 billion euros next year and 17.5 billion in 2024, officials said.

Finance Minister Christian Lindner’s business-friendly Free Democrats (FDP) plans aim to provide relief to households after German inflation hit 8.5% in July, driven by soaring food and oil prices energy, officials said. Read more

Yet politicians from the other junior coalition partners, the Greens, as well as the far-left Linke party were quick to attack them as most beneficial to the wealthy.

“Billion-euro tax relief measures that benefit the highest earners three times more than those on the lowest incomes – this is not in the air,” said Katharina Beck, gatekeeper. speak for the financial questions of the Greens, to the press group RND.

Germany’s umbrella social welfare association said child benefits should be increased by at least 10%, or 22 euros.

“Those who really want to help families can’t play with peanuts,” he said.

($1 = 0.9802 euros)

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Reporting by Christian Kraemer Writing by Sarah Marsh Editing by Peter Graff and Jane Merriman

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