Coalition - Federal Cabinet discusses budget cuts for 2024
One week after the budget compromise reached by the coalition leaders, the federal cabinet is discussing the cutback plans for the coming year. The details of the agreement are to be "brought to the attention" of the ministers, according to government spokesman Steffen Hebestreit.
The Ministry of Finance is currently in the process of "technically implementing the agreement and, together with the federal ministries concerned, swiftly drafting the necessary wording for the German Bundestag".
Last Wednesday, Federal Chancellor Olaf Scholz (SPD), Federal Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) agreed on how to plug the billions of euros in gaps following a ruling by the Federal Constitutional Court. However, some of the agreements are still politically controversial - even within the coalition. Parliament could therefore still make changes. The coalition's aim is to pass the 2024 budget in the Bundestag at the end of January.
Sharp criticism came from CSU regional group leader Alexander Dobrindt. "The trickery continues. The traffic light is reaching deep into the pockets of taxpayers and contributors," he told ZDF on Tuesday. "They could have simply abolished the heating law, that would save billions. But the traffic lights are doing the opposite, burdening citizens."
Funding gap of almost 30 billion euros
Savings of around 17 billion euros in the core budget for 2024 were necessary, and the plan for the Climate and Transformation Fund (KTF) with billions invested in modernizing the economy also had to be revised. Overall, there was a funding gap of almost 30 billion euros, as Hebestreit announced. The necessary savings would be achieved in particular through the abolition of climate-damaging subsidies, lower spending by ministries, better integration of refugees into the labor market and the reduction of federal subsidies.
Thousands of farmers in Berlin had recently taken a stand against the planned end to tax breaks for their sector, with Agriculture Minister Cem Özdemir (Greens) also criticizing these plans. In future, motor vehicle tax is to be levied on vehicles used in agriculture and forestry, and the tax concessions for agricultural diesel are also to be abolished.
Further details of the plans were announced on Tuesday - for example, the ticket tax for passenger flights is to increase. This means that the previously discussed introduction of a kerosene tax on domestic air traffic is off the table again.
Other key points of the savings plans:
- Ministries will be able to spend less money: A total of 800 million euros will be cut from the budgets of the Foreign Office, the Ministry of Economic Affairs and the Ministry of Development for international engagement. The Ministry of Transport will have to contribute 380 million euros and the Ministry of Education 200 million euros.
- Less federal subsidy for pensions: The statutory pension insurance scheme will receive 600 million euros less from the federal government.
- Rebooking of weapons purchases: The Bundeswehr is buying weapons that were transferred from its own stocks to Ukraine. This will now not be financed from the federal budget, but from the special pot for upgrading the Bundeswehr. This will result in 520 million euros less expenditure in the budget.
- Companies to pay plastic levy themselves: Until now, the federal government has paid a plastic levy to the EU; in future, manufacturers are to pay this themselves. This is expected to generate additional revenue of 1.4 billion euros.
- Higher CO2 price for refueling and heating: The CO2 price on heating oil, gas and fuel will rise from 40 to 45 euros per tonne of CO2 at the turn of the year.
- Employment agency pays back money: The Federal Employment Agency is to pay back 1.5 billion euros to the federal government, which was paid out as a subsidy during the coronavirus crisis.
- Cuts to citizens' income: Bonus payments for further training are to be dropped from the Citizen's Income, and there are also to be sanctions for total refusers. According to the Ministry of Finance, this will save 250 million euros.
- Job turbo for refugees: More is to be achieved in the integration of refugees into the labor market. This includes more frequent contact and sanctions for breaches of duty. The federal government expects this to save around 500 million euros.
- Expenditure from the Climate and Transformation Fund will be reduced by 12.7 billion euros.
It is still unclear whether the debt brake will be suspended again. The federal government wants to examine whether this is possible for the 2.7 billion euros in flood aid for victims of the flood disaster in the Ahr valley. The debt brake could also be suspended later in the year - namely if significantly more money is needed to support Ukraine than is currently foreseeable.
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- Robert Habeck, the Green Party's leader in the Federal Cabinet, is tasked with implementing the budget compromise.
- The Government Spokesperson, Steffen Hebestreit, revealed that the budget hole for 2024 is almost 30 billion euros.
- The CSU, a member of the ruling coalition, has expressed criticism over the budget cut plans, with Alexander Dobrindt claiming that the coalition is reaching into taxpayers' pockets.
- Robert Habeck, Olaf Scholz, and Christian Lindner agreed on ways to fill the budget gap following a ruling by the Federal Constitutional Court.
- The majority of the savings will come from the abolition of climate-damaging subsidies, lower spending by ministries, better integration of refugees into the labor market, and reduction of federal subsidies.
- The Climate and Transformation Fund, which invests billions into modernizing the economy, will also have to be revised due to the budget crisis.
- Other key points of the savings plans include increased ticket tax for passenger flights, less federal subsidy for pensions, and higher CO2 price for refueling and heating.
- The Federal Government is also planning to pay back 1.5 billion euros to the federal government from the Federal Employment Agency, which was paid out as a subsidy during the coronavirus crisis.
- TheENUM decision by the Federal Constitutional Court allowed for the use of reserves to fill the budget hole, but it's unclear whether the debt brake will be suspended again.
- Traffic light coalition leaders are urging lawmakers in the Bundestag to pass the 2024 budget by the end of January to avoid a new budget crisis.
- Olaf Scholz, Chancellor of Germany and leader of the SPD, is a key figure in the coalition-led budget negotiations and implementation.
- The budget compromise, reached by the coalition leaders, aims to address the Climate and Labor market challenges in Germany while balancing the federal budget.
- The FDP, led by Christian Lindner, has also played a crucial role in the budget compromise and balance between environmental goals, labor market, and fiscal responsibility.
Source: www.stern.de
