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Clap for Merz Federal Council stops 1,000 euro bonus
Plenary hall of the German Federal Council during a meeting. (symbolic photo)
picture alliance / Flashpic / Jens Krick
Surprising decision!
The tax-free relief bonus of up to 1,000 euros that companies can pay to their employees is not coming for the time being. Surprisingly, the Bundesrat did not agree to the draft law that had already been passed by the Bundestag. The states criticize that they and the municipalities have to bear the majority of the costs.
Federal Council does not approve bonus
The tax-free relief bonus of up to 1,000 euros that companies can pay to their employees is not coming for the time being. Surprisingly, the Bundesrat did not agree to the draft law that had already been passed by the Bundestag. The federal government can now call the mediation committee of the Bundestag and Bundesrat to find a compromise.
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The draft law stipulates that employers can pay their employees a “relief bonus” of up to 1,000 euros this year and until June 30, 2027, which does not have to be taxed. The draft states that the Iran war has brought massive economic upheaval and is increasingly becoming a major burden for many citizens in Germany. The federal government is particularly concerned with high energy prices.
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Federal states criticize cost distribution
The countries' criticism is primarily based on the costs of the bonus and its distribution. Almost two thirds of the tax losses caused by this would have to be borne by states and municipalities. However, the increase in tobacco tax intended to provide counter-financing falls solely to the federal government, so there is no compensation for states and municipalities.
From the perspective of the states, this is another example of how the federal government repeatedly decides on measures that come at the financial expense of states and municipalities. This puts further strain on their already difficult budget situation. The states are demanding that the federal government generally cover the costs that its decisions impose on them and the municipalities. Both sides have been fighting for such a regulation for a long time.
Tax-free premiums have already existed in other crises
The outgoing Prime Minister of Baden-Württemberg, Winfried Kretschmann (Greens), accused the federal government of regularly only planning start-up financing. “In the end, the costs remain with the states and municipalities.” Hamburg's Finance Senator Andreas Dressel (SPD) criticized: “The federal government has provided counter-financing, but only for itself.” He must at least bear the costs of 700 million euros for the municipalities.
According to the draft law, tax exemption costs the state up to around 2.8 billion euros because the employer's premium is deductible as a business expense and the employee does not have to pay tax on it. The bonus is modeled on regulations during the corona pandemic and the energy price crisis resulting from the Russian war of aggression on Ukraine.
Sources used: dpa
