Study: Tax cut does not reach low earners
CO2 prices, inflation, social security contributions - costs for consumers will rise considerably in the new year. The German government is cushioning this with tax relief. However, these will not benefit those who need them most, according to a study by the IW. However, it already has a solution.
According to calculations by the Institute of the German Economy (IW), which is close to employers, most taxpayers will pay more in the new year than in 2023. Low and average earners in particular will have to pay more to the state in 2024, the institute announced on Tuesday. It called on the coalition government to pay citizens the promised climate money in order to provide adequate relief for low incomes.
The IW has received support for its demand from the Federal Environment Agency. Its head, Dirk Messner, also called for a swift introduction. Most of the revenue from CO2 pricing should be transferred back to the citizens, the head of the agency told Redaktionsnetzwerk Deutschland. The climate money is "the right tool to relieve the burden on private households and show that we want to shape climate protection in a social way".
From 2027, the CO2 price will increase "significantly", Messner continued. "This will facilitate the transition to climate neutrality, but at the same time a large part of this revenue must flow back to citizens. The climate money should therefore come quickly." Overall, vulnerable groups must be considered when implementing climate protection measures, Messner emphasized. "Many people in our country have little or no reserves for larger investments. This was underestimated with the Heating Act."
Many things have become more expensive since the start of the year: Social security contributions have risen, as has the CO2 price on fossil fuels. VAT in the catering industry is at the original level of 19 percent, as is VAT for gas, as the IW listed. Electricity has also become more expensive due to rising grid fees. All of this is offset by the tax relief on income tax.
Only high earners benefit for families
The bottom line is that a single person with a gross annual income of 50,000 euros will pay 40 euros more in taxes and duties over the year, the IW calculated. A family with two children and a joint gross annual income of 130,000 euros, on the other hand, would have 262 euros more at the end of the year, while a family with an annual income of 42,000 euros would have 33 euros less.
Single parents with one child are hit particularly hard: according to the IW calculations, a single parent with an annual gross income of less than 36,000 euros will have a loss of 144 euros.
According to the IW, the coalition government "struggled for weeks to find a solution to the budget dispute". The institute criticized the fact that, in the end, taxpayers would have to pay for "the government's failings and the inappropriate and unconstitutional budget policy".
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The institute of the German Economy in Cologne has revealed that low and average earners will face higher taxes in 2024, despite the government's tax relief measures. The Federal Environment Agency, headed by Dirk Messner, agrees and advocates for transferring a significant portion of the revenue from CO2 pricing back to citizens as climate money. According to Messner, this will relieve the burden on private households and promote a socially responsible approach to climate protection.
Source: www.ntv.de
