Billion Potential Around "Cold Progression"

If "bracket creep" were not retained as planned by only one-third, but in full, the state would have revenues of 7.6 billion euros.

Family Benefits, e-card Fees, Public Transport

This could save the federal government some cuts, says Momentum, and calculates the following measures: the non-valorization of family benefits and child tax credits, the increase in health insurance contributions for pensioners, the increase in e-card fees, cuts in public transport, and the increase in the cost of the climate ticket. In addition, more than half a billion euros would still be left over, which could be used to finance administrative support for schools, investments in digitalization, or the promotion of e-mobility.

A significant budgetary effect is already achieved by the government retaining the previously flexibly distributed third for budget consolidation. From 2026 to 2029, the reintroduction will generate a total of 3.8 billion euros.

"Momentum" Sees Positive Impact

In terms of distribution policy, "Momentum" sees a positive impact. For a household in the lowest income quintile, the reintroduced third of "bracket creep" will cost only twelve euros next year: Over the next four years, it amounts to a total of 108 euros - exactly as much as the highest 20 percent of incomes will pay more in the first year alone. The additional contribution of the highest-paid fifth of households over the next four years is 924 euros or 0.34 percent of their annual income. For low-paid individuals, the additional burden is also lower relative to income at 0.15 percent.

What is "Bracket Creep"?

"Bracket creep" refers to the phenomenon where annual wage increases lead to a higher tax burden (by moving into higher tax brackets). "Bracket creep" was abolished under the Black-Green coalition, with one-third retained to allow for distributional policy intervention. This third has now been used in the budget for fiscal consolidation.

(APA/Red)

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