Tax plans in the crisis: Who pays for commuter allowances and restaurants?

Tax plans in the crisis: Who pays for commuter allowances and restaurants?

The Ministry of Finance in Magdeburg is faced with the challenge of assessing the financial impact of the planned tax relief, in particular the increase in the commuter allowance and the reduction in VAT on food in restaurants. A spokeswoman for Finance Minister Michael Richter (CDU) explained that reliable estimates will only be possible after the relevant federal bills have been submitted. Despite this uncertainty, the projects are fundamentally viewed as necessary in order to give Germany urgently needed growth impulses.

However, resistance is emerging. ZDF reports that a survey by the “Süddeutsche Zeitung” shows massive resistance from the federal states to the planned measures. In particular, it is demanded that the federal government itself finance the tax losses resulting from these changes in the law. The principle “Whoever spends must also pay,” as formulated by the Green Party’s financial policy spokesman in the state parliament, Olaf Meister, is becoming increasingly important.

Political reactions and demands

The criticism comes from different federal states. Saxon Finance Minister Christian Piwarz (CDU) expresses concerns that the federal government is causing reduced revenue for states and municipalities through its legislative proposals. Berlin Finance Minister Stefan Evers (CDU) highlights the strained budget situation, while other voices, such as the SPD politician Andreas Dressel, judge the increase in the commuter allowance as a “false incentive” and do not see a priority for the VAT reduction.

In Mecklenburg-Western Pomerania it is emphasized that approval of the change in the law depends on the federal government's willingness to compensate for the resulting loss of revenue. The current tax estimate indicates lower revenue than expected, which further limits the financial flexibility of the federal, state and local governments. The planned tax relief should therefore be seen not only as an economic incentive, but also as a potential risk for municipal budgets.

Financial Impact and Forecasts

The estimated shortfall in revenue from the two measures could amount to around 23 billion euros over the term, of which around 12.5 billion euros are for states and municipalities. The Greens in the state parliament are therefore calling for clear regulations to ensure that when the tax relief is implemented, the financial burden is not passed on to the already heavily strained budgets of states and municipalities.

The federal government's actual goal of reducing sales tax on food in the catering industry to seven percent by 2026 is based on the premise of financial viability. The uncertainties surrounding the distribution of costs and the lack of agreement on possible cost reimbursement by the federal government are weighing on the discussions about the tax plans and raising questions about the future of the targeted tax relief.