After a long start, the federal government agreed on measures that actually help the citizens in dealing with inflation. The focus is primarily on low-income earners and recipients of transfer payments. Nevertheless, the package contains a number of weaknesses.
If those involved weren't so busy emphasizing their own successes and relativizing those of others, some things would be clearer. As it is, however, political Berlin still has a hard time putting the decisions of the coalition summit of the weekend into perspective on Monday. One such example is the planned siphoning off of windfall profits at energy companies. While representatives of the SPD and Greens praise the agreement as a success of their persistent campaigning for an excess profit tax, FDP leader Christian Lindner himself corrects several media reports via Twitter that describe the agreed levy as a "tax". And he's right: the excess profit tax demanded by the SPD and the Greens should address the oil multinationals. The skimming off of random profits in the electricity market, on the other hand, is primarily aimed at medium-sized wind power companies.
After the coalition committee is just before the fight for the interpretive sovereignty. However, the traffic light is not doing itself a favor with its struggles, because it is even more difficult for the public to understand how concrete and helpful the many measures are. This obscures some traffic light success. Above all, such polyphony conceals the fact that the coalition partners, coming from different political directions, have shown themselves capable of constructive cooperation under the pressure of an imminent, historic economic crisis. The package is actually "powerful", as promised by Lindner.
No other income group will feel this as much as transfer money recipients - including the far too many people who need state aid despite working - and low earners. The fact that the 450-euro standard rate of Hartz IV will be replaced by a 500-euro citizen's allowance, the increase of which will be based on the expected inflation in advance, and the group of people entitled to housing benefit will increase from 620,000 to up to 2 million people in the right direction. The reduced social security contributions for incomes of up to 2000 euros, i.e. the extension of the midi-job limit, also means that small income earners have more money in their wallets.
Middle-income earners benefit from a lump sum for employees that is 200 euros higher, from the fact that future pension payments can be deducted from taxable income and office workers can make use of a home office lump sum of up to 600 euros. Increasing the property tax allowance and adjusting income tax rates to combat cold progression will help all income brackets. The higher child benefit also benefits families with small and middle incomes. All this is not small. A 49 or 69-euro ticket that is valid nationwide, provided that the federal states go along with it, will at least help normal earners in metropolitan areas with strong public transport.
It is debatable whether the state really has to pass 200 or 300 euros to all students and pensioners. Both have a similar effect to the "energy money" to be paid out this month according to the watering can principle, which the traffic light actually wanted to get away from. In Germany, students disproportionately often come from academic households and relatively often have financially strong parents behind them. Medium and high pensioners have already benefited from historically high inflation adjustments. But pensioners also have a lot of weight at the ballot box.
The tax exemption of up to 3,000 euros on inflation premiums from employers is in turn unequally effective: Large corporations will have to distribute the money to their employees as part of the "concerted campaign". The small metal construction company, the garden center or the brewery are already so burdened by additional expenditure for energy and foreseeable customer reluctance that there is rather no leeway for special payments. As with the first two relief packages, the many solo self-employed in the country are largely left out anyway.
In fact, there are hardly any signs of effective help for small and medium-sized enterprises either. Neither new KfW bridging loans, no matter how cheap, nor grants for switching to other energy sources help the small pandemic-stricken company in need. Those who have no reserves but a lot of debt can do little with such liquidity loans and investment aids and will not celebrate relaxed insolvency rules either. The only thing that would really help all consumers and businesses in the long term is falling energy prices. And of all things, the coalition remains vague after the weekend.
What is certain is that the EEG surcharge will be permanently eliminated and the government will reduce sales tax on gas from 19 to 7 percent. The promised basic supply of consumers with a capped electricity price and the promised examination of whether a price cap for the basic heat supply is not feasible, on the other hand, has no direct price-braking effect.
The electricity price cap - and an associated brake on grid fees - depends on whether the EU Commission will develop a way to skim off random profits in the near future. A national regulation should only apply if Brussels is too slow or unwilling. That will be the case in a few weeks at the earliest. It remains to be seen whether the levy on chance profits intended to counter-finance the electricity price cap is legally feasible at all. The basic heating price, i.e. a capped gas and oil price, may only be something for the winter of 2023/2024, when Germany is unlikely to go into the cold period with full gas storage facilities.
So some uncertainties and imbalances remain, whereby the greatest injustice is still not addressed due to resistance from the FDP. No matter how effective the relief measures are in the end, poor people and average earners will have less money at their disposal in the coming months and will have to reduce their standard of living. The crisis is largely bypassing high earners and the super-rich, because a few thousand euros more or less a year makes no difference to them. So you don't have to contribute significantly to the social costs of the energy and economic war that Russia and Europe are fighting with each other.
This lacks solidarity and raises questions about fair (burden) distribution in Germany. The SPD and the Greens have enough proposals on the table for this, ranging from a one-off tax to a wealth tax, a reformed inheritance tax and a higher top tax rate. The fact that none of these ideas were even discussed in the coalition committee at the weekend indicates that this imbalance will remain in the foreseeable future.
