Former Coalition Agrees on Tax Relief and Child Benefits

In a surprising turn of events, despite the dissolution of their coalition, the SPD, Greens, and FDP have come together to propose significant financial relief measures. Their joint legislative package aims to alleviate economic burdens by increasing the child allowance to 255 euros and the child tax allowance to 6,672 euros. Additionally, a one-time child supplement of 25 euros and a tax relief totaling 11 billion euros are on the table. These measures, aimed at addressing cold progression, include an increase in the basic tax-free allowance and adjustments to higher tax rates.

The proposal does not include originally planned tax incentives for investments and research, which have been excluded. The Bundestag is expected to vote on these changes on December 16, although approval from the Bundesrat is anticipated only in the following year.

The package also proposes an increase of 5 euros in the child allowance and immediate child support for families with low incomes. This would result in a 306-euro relief for families earning 60,000 euros annually. However, the extent of this relief has drawn criticism, notably from the Greens, who argue that the package lacks incentives for business investment.

While the SPD and FDP have voiced their support for the package, the Greens remain critical of the missing elements related to business support. As the Bundesrat's approval remains uncertain, the responsibility for garnering support falls on the Union and SPD leaders. The planned measures, if passed, promise to significantly impact families and individuals by addressing inflationary pressures and cold progression in the tax system.