German Taxpayers To Receive €300 Lump Sum Amid Exploding Energy Costs

As California looks to ‘ease’ crippling gas prices by handing out $400 debit cards, Germany (and we suspect many other countries) will soon be offering workers a one-time €300 (US$329) payment to ‘offset’ the effects of inflation.

If inflation isn’t high enough already, throw gas cards at everyone and watch what happens

— Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 24, 2022

As for the economic effects of such ‘offsets,’ Rabobank notes:

The EU was already looking at spending lots on energy subsidies…  unless the surge in energy prices is short-lived –which hinges on the war and the metacrisis suddenly resolving themselves(!)– then this is how you return to something like a 70’s-style wage-price spiral.

More on Germany via The Local,

After a meeting late on Wednesday evening, the German government managed to agree on a package of relief measures for households struggling with energy costs, including cut-price transport tickets and a one-off energy allowance.

The new measures, which include a one-off €300 energy allowance for workers, should offer quick and unbureaucratic relief for low- and middle-income earners, the government said on Thursday.

When the allowance comes in, all employed persons liable to income tax will be paid a one-time flat-rate energy allowance of €300 as a supplement to their salary.

In their original proposals, the SPD had envisioned this money being paid out via the 2023 tax return, which would have the disadvantage of not reaching consumers’ pockets for another two years.

But the government may be working on a quicker way to release the money to struggling households. 

This allowance is in addition to a €200 lump sum that’s set to be paid to people receiving social welfare payments such as housing benefit and Hartz IV. 

Aside from the allowance, the traffic-light coalition is also planning a tax cut on fuel for drivers, improved energy efficiency measures and more relief measures for middle- and low-income families.

It will also introduce the SPD’s plans for a ‘child bonus’ on €100 per child, similar to the one introduced during the height of the Covid crisis. 

Couple of striking developments in 🇩🇪 energy policy today:
1. The coalition has just announced a pretty chunky household relief package including
– €300 income tax rebate for every resident
– 90 days of unlimited public transport for €9/month
– €100 per child for families /1

— Oliver Moody (@olivernmoody) March 24, 2022

Public transport ticket

There are also plans to slash prices on public transport with a 90-day ticket for just €9 in an attempt to encourage financially burdened car drivers to switch to greener transport options. 

“Taking the bus and train will probably never have been cheaper in Germany,” said Green party co-leader Ricarda Lang. 

The traffic-light coalition of the SPD, Greens and FDP had met at 9pm on Wednesday to thrash out a package of measures that each of the parties would be happy with.

Many of the measures were hotly debated within the cabinet.

One of the most controversial plans – a proposal for a petrol rebate put forward by Finance Minister Christian Lindner (FPD) – didn’t make it into the finalised package. 

Announcing the measures on Thursday morning, the coalition promised that the “middle” of society would be relieved efficiently and in a socially just manner.

FDP leader Christian Lindner said the agreement of the coalition leaders was proof of the government’s ability to take decisive action. 

“The coalition is convinced that we have to protect the people and the economy in the face of these enormous price increases in the short term and for a limited period of time,” he said.

The coalition had agreed on a first relief package in February before the outbreak of the Ukraine war.

Among other things, it provided for the abolition of the Renewable Energy Act (EEG) surcharge, worth billions, on electricity bills from July.

Previously, this was planned for the beginning of 2023. The package also included an increase in the commuter allowance for long-distance commuters.