The government has announced a “huge” relief package. But crucial questions are still open: where does the money come from? And above all: Who is really so needy that he needs help? Seven questions and answers about what is fair in Germany.
The time will soon come: At the end of its cabinet meeting at Schloss Meseberg, the federal government announced that it wanted to relieve the burden on citizens in view of the sharp rise in energy prices. Work on the package is said to be “completed soon”. That’s pretty vague. That’s why we’re giving an overview here of the seven big questions being discussed and what solutions are emerging:
There are various proposals for direct payments to those in need. However, it is still unclear via which channel this can flow to the people. So far, the only option is to have the payment run through social security. In addition, a flat-rate heating fee will be introduced as part of the housing benefit reform. It is still unclear whether there should be a reform of the income tax as part of the relief package. Finance Minister Lindner had presented a proposal to cushion the “cold progression”. The Federal Chancellor is available for it, but the Greens are against it.
Chancellor Olaf Scholz announced that the relief should be “precise and tailor-made”. Which people are in need and which criteria should be used to determine this is currently the subject of intense debate. Why this is so complex is also shown by the fact how difficult it is just to define how many Germans are considered poor – which would be one way of defining need: The Paritätischer Vermögensverband shocked in July with the number 13.8 Millions, 300,000 more than 2020. But the number is controversial. Because poor is considered to be someone who earns less than 60 percent of the median income. Critics say this indicator says something about inequality, but not about neediness. In addition, it does not matter in this calculation how much wealth someone has.
Federal Finance Minister Christian Lindner (FDP) spoke of a “massive package”. Nothing was known about the amount of the aid. This is also due to the fact that there is still intensive discussion about who should finance the relief package. Measured against the difficult situation, the situation in the federal budget is currently still relatively relaxed – thanks to decent tax revenues. According to Lindner, there is scope in the single-digit billion range. However, this sum would not be enough for the relief package.
The search for alternative sources of money is also in full swing. For example, the SPD is considering tapping into the €80 billion climate and transformation fund (TKF). The Greens are strictly against “looting” the fund for this purpose. The Ministry of Finance considers the proposal to be legally risky. An alternative would be to get something back from the corporations that are benefiting from the crisis with an excess profit tax. Since this is legally and technically very difficult to implement, the government has so far rejected the excess profit tax. However, a partial alternative is currently more likely, namely a reform of the electricity market favored by economists, which would lead to similar results: A higher tax on electricity that is not generated in gas-fired power plants.
Businesses suffer just as much from the high energy prices, sometimes even more – also because, unlike consumers, they have no right to basic services. Companies are already complaining that they can no longer find a supplier to supply them. This would lead to a stop in production with the corresponding consequences for the employees. Economics Minister Robert Habeck (Greens) called the situation “worrying” and announced help.
How the gas price develops depends heavily on Russia’s behavior. And that’s hard to predict. That is why the government is primarily focusing on the high electricity prices. There is currently an automatic mechanism for high gas prices to drive up electricity prices. As a result, providers of green electricity are also currently earning more, although their costs have remained more or less the same. In theory, the government could subsidize the gas used to generate electricity. Spain and Portugal are going this way. An electricity price cap would probably have to be introduced across Europe, which is politically difficult because the costs are likely to overwhelm some states given the already high debt burden.
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From June to August, citizens were relieved of their mobility with the 9-euro ticket. There was no direct successor. On the contrary, the travel costs are increasing in many transport associations. Now there was movement in the debate as to whether there could be a successor to the Germany-wide ticket and where the money would come from. Finance Minister Lindner has signaled support for the first time if the federal states go along with it. In detail, an agreement must now be reached on the distribution of the additional costs. The most likely variant is currently a ticket in the amount of 49 euros – but nobody wants to commit to it yet.
The contribution “The relief package: What is to come, who benefits, who pays for it” comes from WirtschaftsKurier.