According to the federal government’s new report on the minimum subsistence level, the basic tax allowance must be raised by a total of 348 euros to 8352 euros a year in two stages by 2014. This meant that employees had more money, since the tax authorities only deduct taxes on income above the basic tax-free amount.
According to the draft, which is available to the german press agency, the basic allowance must be increased next year from the current 8004 euros to 8124 euros initially. In the following year a further increase would be possible. According to the report, there was no need for action on the children’s allowance in 2013, but minimal corrections could be made in 2014.
The government’s biennial report on the minimum subsistence level was due to be voted on by the various departments on monday, and the report was due to be published on july 7. November the black-yellow cabinet is to decide on it.
According to calculations by tax lawyer frank hechtner, the first step in the increase means a reduction in the tax burden for taxpayers of about 23 euros per year. The next increase in 2014 will mean a further reduction of 43 euros per year. Not taken into account are the coalition’s more far-reaching tax plans.
The increase in the basic tax-free amount that is now required corresponds almost exactly to the figures that are part of the black-yellow coalition’s controversial tax plan. The CDU/CSU and FDP want to raise the basic tax-free allowance in two stages – by 350 euros to 8354 euros a year – as a step toward reducing the "cold progression". In addition, there will be a different tariff structure, so that tax rates will only apply to higher incomes.
The black-yellow relief package has a volume of 6.1 billion euros per year. The federal government is to shoulder two-thirds of the costs incurred. The SPD and green party-led states in particular reject the package. At least a higher basic tax allowance, which is constitutionally required anyway, was also supported by the SPD and the greens in the bundesrat. However, they initially wanted to adopt the current 9. Wait for the subsistence minimum report.
The report supports the view of the ministry of finance that the existing basic tax-free allowance from 2013 onwards will no longer be sufficient to exempt the minimum subsistence level from taxation, as required by the constitution: "the constitutional necessity of raising the basic tax-free allowance from 2013 onwards is hereby confirmed."
An increase in the child allowance is not necessary until 2014. "The federal government will also legislate on this in good time."
The basic tax-free allowance ensures that the portion of income that is absolutely necessary for subsistence (subsistence minimum) is not taxed. Every citizen therefore has the right to cover the minimum subsistence level for himself and his children from untaxed income. If the costs rise, the allowances must also be increased. The living wage is important not only for every taxpayer, but also for the long-term unemployed and others in need.
In the living wage report, the government examines every two years how the costs of food, clothing, household goods, rent and heating have developed. The expenditures for this minimum requirement are protected according to the basic law against the access of the tax authorities.
For employees and spouses there is the basic allowance of currently 8004 euros each. For every euro earned in excess of this, a separate, higher tax rate is due as rates rise. The constitutional right to a tax-free subsistence minimum, including for children, is implemented through tax-free allowances or child benefits.