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BERLIN: German Finance Minister Christian Lindner set out 10bil (RM45bil) of tax adjustments to ease the burden on people suffering from high inflation.
“To allow for a tax increase during these times is not fair, and is dangerous for economic development,” Lindner told reporters.
He referred to a phenomenon known as “bracket creep,” when inflation pushes workers’ pay into higher tax brackets without any real changes in purchasing power.
Not adjusting the tax code in such a situation would not be fair, Lindner argued.,
German government spokesman Steffen Hebestreit told journalists at a regular news conference that the three coalition parties would now discuss Lindner’s proposal and that the chancellor was generally open to the idea. It would become one building bloc in a bigger relief package which the government aims to present in the coming weeks to help consumers cope with the impact of higher inflation.
The government has earlier this year implemented two relief packages with measures worth more than 30bil (RM137bil).
The plan, which could still change in negotiations of the ruling coalition, includes raising income-tax brackets to adjust for inflation, increasing the allowance for tax-free income and boosting child benefits.
High-income earners will not see such favourable adjustments, as the measures are designed to reduce pressure on the middle class, he explained. — Bloomberg