2023-12-13 11:08:58
The “traffic light” has agreed on an austerity program and tax increases in order to plug a billion-dollar budget hole. Citizens and companies therefore have to dig deeper into their wallets.
Has money worries: Federal Chancellor Olaf Scholz.
Michele Tantussi / Getty Images
It was a long, sleepless night for the “traffic light”. Chancellor Olaf Scholz, Vice Chancellor Robert Habeck and Finance Minister Christian Lindner wrestled and haggled over the federal budget for the coming year until six in the morning on Wednesday. The result of the marathon negotiations: The federal government wants to comply with the debt brake once more from 2024 – at least a little.
In order to achieve this goal, citizens should be asked to pay even more by the state in the future. Because next year alone, the “traffic light” will have to plug a budget hole worth billions. At the same time, Chancellor Scholz wants to stick to three central goals of his coalition: “We are vigorously pushing forward the climate-neutral transformation of our country. We strengthen social cohesion. And we stand closely with Ukraine in its defense once morest Russia,” he said.
Savings must now be made elsewhere: “But one thing is clear: we have to get by with significantly less money in order to achieve these goals,” said SPD politician Scholz. On the one hand, this means a higher tax burden for citizens and companies, but on the other hand, they will have to accept cuts in government subsidies from next year.
Refueling and heating are becoming significantly more expensive
In order to close the budget gap, the traffic light wants to increase the price of CO from January from the current 30 euros per ton to 45 euros per ton. The result: heating costs in Germany are rising. According to the comparison portal Verivox, gas would become more expensive by 0.39 cents per kilowatt hour and heating oil by 4.8 cents per liter. “A model family with a heating requirement of 20,000 kilowatt hours has annual additional costs of 78 euros for gas or 96 euros for oil,” explains Verivox energy expert Lundquist Neubauer.
But the traffic light plan is not only noticeable in the household, but also at the petrol pump: “Gasoline is becoming more expensive by 4.3 cents per liter, diesel by 4.8 cents per liter,” Neubauer told the NZZ.
Agriculture and forestry companies also have to prepare for cuts because so-called agricultural diesel, state aid for commercial vehicles, is on the cancellation list. The federal government recently spent a total of 400 million euros on this.
Electricity costs are also skyrocketing
The traffic light wants to create additional financial leeway by eliminating subsidies for the electricity network. The so-called transmission network fees are to be canceled here. This also means additional costs for citizens and companies: the electricity network fees for households in 2024 would have already increased by around 11 percent, explains Verivox expert Neubauer. The coalition had already decided on this beforehand.
For a three-person household with a consumption of 4,000 kilowatt hours, this would mean additional costs of around 48 euros on average. “If the distribution network operators have to increase electricity network fees even further due to higher transmission network fees, the additional costs will increase by at least 100 euros,” says Neubauer.
No more money for electric cars
There will also be cuts in the climate sector. For example, the funding for the purchase of electric cars is set to expire in 2023, earlier than planned, announced Green Party politician Robert Habeck. The year 2025 was previously scheduled for this. There will also be cuts in the solar industry. “That hurts me,” said Habeck, referring to both measures.
Flights are becoming more expensive
The Germans will also have to dig deeper into their wallets for domestic flights from 2024, as the traffic light is also planning a kerosene tax. To date, kerosene used in commercial aviation has been exempt from energy tax.
Jost Lammers, President of the Federal Association of the German Aviation Industry, warns of the consequences of the step for his industry: The state location costs in Germany are already the highest in a European comparison. “In this situation, the federal government is making feeder traffic to German hubs more expensive by going it alone nationally and taxing kerosene within Germany, thereby shifting traffic to other European and international countries.”
Debt brake might fall later
Despite all the savings, the traffic light does not completely rule out a renewed suspension of the debt brake in 2024. For example, the coalition is examining an exception to the fiscal rule for payments to the victims of the flood disaster in the Ahr Valley in 2021. His coalition will approach the CDU/CSU as the largest opposition faction and seek their support for this step, said Chancellor Scholz. According to the debt brake, the federal government in Germany is only allowed to take on new debt up to 0.35 percent of gross domestic product – apart from emergencies.
At the same time, the coalition leaders assured Ukraine of further and comprehensive aid. This support will come from the regular budget, “just as we planned and, above all, for as long as necessary,” said Scholz. This included 8 billion euros for weapons, financial aid for the Ukrainian budget and probably more than 6 billion euros to support Ukrainian refugees here in Germany. “If the situation worsens as a result of Russia’s war once morest Ukraine, for example because the situation on the front deteriorates, because other supporters reduce their aid to Ukraine or because the threat to Germany and Europe continues to increase, we will have to react,” said Scholz.
There will likely be many more rounds of negotiations in the coming days until the new budget is finalized. The federal government actually wanted to pass the 2024 budget before the end of the year. However, it was already clear last week that this would no longer be possible due to consultation times in the Bundestag and Bundesrat.
Now, at least the Bundestag’s budget committee might potentially conclude its deliberations before Christmas. In January, the Bundestag might meet for budget week and decide on the figures, following which the Federal Council might give the green light. A so-called provisional budget management would apply for that long.
Then, for the time being, only expenses that are necessary to maintain administration and fulfill legal obligations are possible. In practice, however, the Ministry of Finance can authorize ministries to use a percentage of the funds in the not yet approved draft budget each month.
The coalition leaders were nevertheless optimistic on Wednesday that they would be able to implement the compromise reached. Finance Minister Christian Lindner described the agreement as a clear signal that the coalition was “capable of acting and reaching agreement” despite difficult tasks. Olaf Scholz spoke of trusting, confidential and constructive discussions.
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