THE GERMAN Ministry of Finance plans to raise the income taxation threshold for citizens and slightly increase child benefits in response to the highest inflation rate in the country in several decades, government officials announced. The tax-free income amount should therefore be raised from next year to 10,632 euros, and then in 2024 to 10,932 euros, from the current 10,347 euros.

Furthermore, the income threshold to which the highest tax rate applies should also be raised – so from next year the highest rate will apply to annual income of 61,972 euros, and in 2024 to 63,515 euros. For comparison, the highest rate currently applies to annual income of 58,597 euros and above.

Officials also announced that child benefit for the first two children will increase by 8 euros, to 227 euros per month in 2023.

Tax changes

As a result of the planned tax changes, tax revenue should decrease by 10.12 billion euros next year and by 17.5 billion in 2024. These plans by German Finance Minister Christian Lindner, from the pro-business Free Democrats party, aim to provide some relief to households after inflation reached 8.5 percent in July, driven by a jump in food and energy prices.

However, coalition politicians from the Greens party, as well as the far-left Linke party, immediately attacked those plans, claiming that they mostly favor the rich.

“Tax relief measures worth billions of euros from which the highest earners benefit three times more than those with low incomes – that is not in line with this moment,” the Greens' financial affairs spokesperson told the RND news group. Germany's umbrella social welfare association, meanwhile, announced that child benefit should increase by at least 10 percent, or 22 euros. “Those who truly want to help families should not be playing around with peanuts,” the association said.

Source: index.hr