German Finance Minister Christian Lindner announced on Wednesday that Berlin would adopt a series of fiscal measures worth 10 billion euros in 2023 to mitigate rising prices.
This package of measures consists in particular of raising the level from which the maximum income tax rate of 42% will be applied and increasing the amount of family allowances, he said, noting that the government was “forced to act “before the increase in prices. , particularly energy.
Compensate for the “multiplier effect”
These measures are also intended to compensate for the “multiplier effect”, or “cold progression”, whereby a person suffers greater taxation for a salary increase, obtained to offset the effects of inflation, which decreases their purchasing power.
If nothing is done, some 48 million people will suffer a tax increase from January 2023 because of this phenomenon, said Christian Lindner.
“For the State, benefiting (from an increase in tax revenue) at a time when daily life has become more expensive (…) is not fair and is also dangerous for the economy,” he said, admitted at a press conference .
The fear of a new price rise
“For many people, daily life has become much more expensive. We fear an increase in gas, energy and food prices”, explained the minister of the coalition government of Olaf Scholz.
“Our country’s economic outlook has also become more fragile and forecasts for economic growth need to be revised downwards,” he added.
Inflation reached 7.5% annually in July, less than in June, but still at a very high level due to the war in Ukraine.
Source: BFM TV
