Lindner Proposes Enhancement in Child Allowances and Benefits
Finance Minister Lindер, as stated by him and in line with his coalition partners' plans, aims to combat what's known as 'cold progression' more aggressively over the next two years. This is based on reports, including the tax progression report and the report on the subsistence minimum, that Lindер shared with the cabinet last weekend, as reported by "Bild".
According to these reports,
- The basic allowance is set to rise by 312 euros to 12,096 euros by year-end, and further to 12,348 euros by 2026.
- The child allowance will see an increase of 60 euros to 6,672 euros next year, and to 6,828 euros by 2026.
- Child benefit is slated to increase to 255 euros per month in 2025, and to 259 euros in 2026 as previously planned.
The planned increases in child allowance and child benefit are slightly more than what was initially expected following the zero round of the citizen's allowance in 2025. As Lindер told "Bild", "We've agreed to stick to the old figures." He aims to create a substantial difference between earned income and social benefits.
Lindер: "Fairness requirement"
Lindер explained to the newspaper that, despite numerous spending requests from the coalition, they are willing to forgo billions of euros. He emphasized that it's a "requirement of fairness to relieve the working population." In addition, he mentioned that "I have ensured that I have the federal chancellor's support."
In simpler terms, according to the Federal Ministry of Finance, "cold progression" refers to situations where income and wage increases only counteract inflation, thus, despite unchanged performance, the average burden actually increases. For instance, if the cost of living increases by 2% in a year, and a taxpayer earns 2% more in the same year, their real situation hasn't changed, but they still pay more taxes due to their increased nominal income.
In his efforts to combat 'cold progression', Finance Minister Lindер has decided to maintain the initial figures for the zero round of the citizen's allowance in 2025, as he believes it is a necessity to preserve fairness and prevent the working population from bearing an increased average burden despite nominal income increases. The aggressive combat against 'cold progression' over the next two years aims to create a significant gap between earned income and social benefits.
