From Ahrtal to ticket tax - budget agreement at a glance

Federal Government - From Ahrtal to ticket tax - budget agreement at a glance

Almost a week after the agreement reached by the coalition leaders in the budget crisis, the federal government presented a list of cuts on Tuesday. The federal cabinet is due to approve it on Wednesday, but some of the compromises are still politically controversial. Parliament could therefore still make changes before the planned Bundestag resolution on the budget for 2024 at the end of January.

Savings of around 17 billion euros in the core budget were necessary following the Karlsruhe budget ruling. The plan for the Climate and Transformation Fund(KTF) with billions in investments in the modernization of the economy also had to be revised. Ultimately, there was a funding gap of almost 30 billion euros, according to government spokesperson Steffen Hebestreit.

A solution could be found by abolishing climate-damaging subsidies, reducing expenditure by ministries, better integration of refugees into the labor market and reducing federal subsidies. The most important decisions at a glance:

Subsidies will be abolished

- Tax breaks for farmers will be abolished: Motor vehicle tax will be payable for vehicles used in agriculture and forestry in future. This is expected to generate additional revenue of 480 million euros. The abolition of tax concessions for agricultural diesel is expected to generate a further 440 million euros.

- Higher ticket tax for flying: The air traffic tax will be increased. In addition, a reduction mechanism is to be abolished, which comes into effect when revenue from emissions trading for air traffic increases. Together, this is expected to generate up to 650 million euros next year.

- Companies to pay plastic levy themselves: Until now, the German 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.

Ministries must make savings

- Less money for international engagement: A total of 800 million euros will be cut from the budgets of the Federal Foreign Office, the Ministry of Economic Affairs and the Ministry for Development. 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. At the same time, a pension level of 48% is to be guaranteed until 2039. The pension level indicates what percentage of the current average wage someone who has always worked and paid contributions at the average wage for exactly 45 years will receive as a pension.

- Employment agency pays back money: The Federal Employment Agency is to pay back 1.5 billion euros to the federal government, which flowed as a subsidy during the corona crisis.

- Rebooking of weapons purchases: The Bundeswehr is repurchasing weapons that were given to Ukraine from its own stocks. This is now not being 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.

More people in work

- Cuts to the Citizen's Income: Bonus payments for further training will be removed from the Citizen's Income, and there will also 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.

Cuts in the climate and transformation fund

- The program expenditure of the special fund for climate protection will be reduced by 12.7 billion euros. Among other things, subsidy programs would be abolished where products had established themselves on the market, it was said across the board. At the weekend, the Ministry of Economic Affairs had already announced the end of the environmental bonus for electric cars. In addition, a 5.5 billion euro subsidy to reduce grid fees for the electricity grid will be discontinued.

- Higher CO2 price for refueling and heating: This should generate more revenue for the KTF. 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.

- Equity increase for the railroads: To enable the railroads to make urgently needed investments despite the cuts in the KTF, their equity is to be increased by up to 20 billion euros over the next few years.

- Less money for the federal states: The federal government is cutting 350 million euros from the regionalization funds that the federal states receive to finance rail transport.

Update of forecasts and the debt brake

The federal government is also saving several billion euros in the new budget simply because forecasts are becoming more realistic. For example, interest expenditure is now expected to be 2.3 billion euros lower. In addition, the federal government is dipping around 3.2 billion euros deeper than planned into a reserve that was accumulated during the refugee crisis.

However, none of this will plug the billion euro hole. The federal government therefore wants to examine whether it can also suspend the debt brake in 2024. This will initially involve 2.7 billion euros in flood aid for victims of the flood disaster in the Ahr valley. However, the federal government wants to have a suspension decision checked legally as watertight as possible beforehand. The question: Is there really an emergency situation as required by the Basic Law? The traffic light coalition also wants to talk to the CDU/CSU about whether they would support a suspension or take legal action again.

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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1. The EU has expressed concern about the budget agreement in Germany, as it could impact the integration of Ukrainian refugees.
2. Household cleaning products are exempt from the higher ticket tax, providing some relief for households during this time of budget cuts.
3. The Federal Employment Agency is actively working on improving the integration of refugees into the German labor market, aiming to reduce expenditures.
4. The recent budget agreement has introduced vehicle tax for vehicles used in agriculture and forestry, impacting the farming sector in Germany.
5. Climate activists have criticized the German Federal Government for not doing enough to combat climate change, despite the budget crisis.
6. The Federal Government in Berlin is committed to finding a balance between the budget crisis and the need to invest in the modernization of the economy through the Climate and Transformation Fund (KTF).
7. The Federal Government's decision to make savings in the KTF has led to cuts in subsidy programs for renewable energy, including the end of the environmental bonus for electric cars.
8. Steffen Hebestreit, spokesperson for the Federal Government, has mentioned that the budget agreement is still politically controversial, and there may be changes in Parliament before it is finalized.
9. The Bundeswehr's repurchase of weapons from its own stocks to support Ukraine has resulted in savings of 520 million euros, freeing up resources for other areas of the budget.
10. The German federal armed forces are keen on increasing their equity for urgent investments, despite the budget constraints, in light of the climate change and energy transition challenges.

Source: www.stern.de