Weekly happenings in the German federal parliament, Bundestag
The 2023 German federal budget unveils a comprehensive set of investments and relief measures designed to bolster both citizens and the economy, with a focus on infrastructure, climate transformation, defense, and social support.
Key Investments
- Infrastructure Special Fund: A €500 billion fund over 12 years, independent of the core budget and exempt from the debt brake, will be allocated as follows:
- €300 billion for national infrastructure projects, encompassing transport, energy, healthcare, education, digitalization, and research & development.
- €100 billion earmarked for the Climate and Transformation Fund, targeting renewables, hydrogen, climate-friendly industries, and building renovation.
- €100 billion for projects at the state level, distributed according to population size and tax revenue[1][3].
- Defense Spending Increase: The budget permits increased borrowing for defense beyond the constitutional debt brake, aiming to boost military capabilities with spending rising to €95 billion in 2023, €117 billion in 2024, and potentially €130 billion by 2025, aiming to reach NATO’s target of 3.5% of GDP by 2029[1][4][3].
- Transport and Digital Infrastructure Modernization:
- Deutsche Bahn receives substantial funds (€150 billion) for rail modernization, including major projects like Stuttgart 21.
- Investments in digital infrastructure include AI, secure satellite communication, and data center upgrades to benefit both civilian and defense sectors[3][4].
- Support for Climate and Energy Transition: Increased funding supports energy security projects such as renewables, LNG terminals, hydrogen infrastructure, and grid modernization to achieve climate neutrality by 2045[1][3].
Relief Measures for Citizens and Economy
- Energy Cost Relief:
- Reduced energy taxes (e.g., on gas and electricity) to alleviate cost burdens.
- Heating subsidies for vulnerable households (€230 initially and €345 subsequently).
- Temporary reduction in fuel prices and elimination of the EEG surcharge to lower electricity costs[2][5].
- One-off Payments and Allowances:
- €300 one-off payment for students.
- Additional child benefit of €250 per child per month plus a €20 special allowance.
- Enhanced housing allowance including a permanent heating cost component.
- Inflation compensation through adjusted tax burdens and higher allowances[2].
- Tax Relief Measures:
- Pension contributions in 2023 made fully tax-deductible.
- Increased and permanent home office tax allowance.
- Increased commuter allowance and national public transport ticket (Deutschlandticket).
- Raised mini-job income limit to €2,000 for higher net income[2][4].
- Labor Market Support: Unemployment insurance compensations to income reductions via short-time work allowance[2].
- Corporate Incentives:
- An additional 20.5 million euros from the parliamentary procedure will be invested in industrial research for companies in 2023.
- Program spending for 2023 alone will reach over 35 billion euros in the Climate and Transformation Fund.
- Over one billion euros will be available through a KfW program for the acquisition of cooperative shares for self-occupied housing in 2023.
[1] Source: budget draft [2] Source: press release from the Federal Ministry of Finance [3] Source: press release from the Federal Ministry of Economics and Climate Protection [4] Source: press release from the Federal Ministry of Defence [5] Source: press release from the Federal Ministry for Economic Affairs and Climate Action
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