Updated April 23, 2020, 6:19 am
After long negotiations, the Union and the SPD have agreed on further aid in the corona crisis. Schools, companies, but also gastronomy receive grants and relief. Read here what the decisions mean for whom.
The grand coalition wants the massive consequences of this with new aid worth billions for employees, restaurants, companies and schools Corona crisis mitigate. Short-time work benefits are to be increased in order to compensate for loss of income, especially for low-wage earners. At the same time, the duration of the unemployment benefit is extended. The restaurants that are particularly hard hit by the crisis are getting tax relief.
The leaders of the black-red coalition in Berlin agreed on this late Wednesday evening. The federal government must take further measures to cushion social and economic hardship and support economic reconstruction, according to a decision paper. Germany has successfully slowed down the pandemic through drastic restrictions. This has significant economic and social consequences.
“Nevertheless, we can only loosen the restrictions again in small steps because the virus continues to spread Germany is present and we must not jeopardize the success by another exponential wave of infection. “Therefore, the necessary decisions would have to be made in such a way that there will continue to be financial possibilities in the future.
CDU chief Annegret Kramp-Karrenbauer spoke of “very intensive negotiations”, which dealt with difficult detailed questions. But she was “very happy and satisfied with the result”. SPD chairman Norbert Walter-Borjans said that important decisions had been taken for companies and employees who suffered losses.
On Thursday Chancellor Angela Merkel (CDU) made a government statement in the Bundestag on how the coalition should proceed in the crisis.
An overview of the decisions:
Raising short-time work benefits
Due to the severe economic consequences of the Corona crisis, hundreds of thousands of people are on short-time work. The Federal Employment Agency replaces part of the lost net income: 60 percent for childless employees and 67 percent for employees with children. Some collective agreements stipulate that short-time work benefits will be increased to almost 100 percent of net wages. However, this does not apply in many industries.
For this reason, the German Trade Union Confederation (DGB) called for a temporary increase to 80 and 87 percent. Otherwise, many people would no longer be able to pay their rent or installment loans for their car or home.
The coalition leaders now want to increase the short-time work allowance, staggered. For those who receive it for a working time reduced by at least 50 percent, it should be 70 percent or 77 percent for households with children from the 4th month of reference and 80 percent or 87 percent for households from the 7th month of reference increase with children – at the latest until the end of 2020. In addition, existing short-time workers will be expanded from May 1 to the end of 2020.
Extension of unemployment benefit
The economic life has largely come to a standstill because of the restrictions, with many companies orders and sales slumping. This also has consequences for the job market, where hardly any new jobs are currently being placed. Therefore, the duration of the unemployment benefit I is to be extended – by three months and for those whose entitlement would end between May 1 and December 31, 2020.
Anyone who becomes unemployed has received unemployment benefit for 12 months so far, this applies to employees up to 50 years of age – provided that they were previously subject to compulsory insurance for 24 months or more. For unemployed people aged 50 and over, the period of benefits increases in several steps to up to 24 months. Prerequisite: You were insured for 48 months or more. The level of unemployment benefit is 60 percent of the last net earnings, and 67 percent for unemployed people with children.
Kramp cart builder With regard to the Union group’s resistance to an increase so far, said that the compromise found was justifiable – since it would specifically help those affected, but there was no watering can principle.
Tax aids for the catering trade
The catering industry is currently breaking away a large part of the revenue. For this reason, catering businesses should now be tax-free. According to the resolution, the value added tax for food will be reduced from July 1 to June 30, 2021 at a reduced rate of 7 percent.
Up to now, a 19 percent VAT rate has been applied to meals that are consumed in a restaurant, a café or a bar. For dishes that the guest takes away or orders home, there is usually only 7 percent. Now a rate of 7 percent should generally apply.
CSU boss Markus Söder said he would have preferred a longer duration to lower the VAT rate for the catering trade. “There was a thick board to drill and there were some hard chunks,” he said. Nevertheless, he was satisfied after the negotiations. “We were firmly convinced from the beginning that VAT was the right way to go because it was an incentive system, because it was a go-around system.” In total, the tax cut means relief of four billion euros.
Söder at the same time warned against equating the fixed date of the tax cut from July with a guarantee that the catering trade could then be reopened. The decisive factor was how the infection numbers developed until then. However, July was the area in which the federal states had enough time to prepare “so that a wide range of gastronomic work is possible”. However, no reliable statements are yet possible for May.
More money for schools
The vast majority of schools are closed, and lessons should start gradually again at the beginning of May. The federal government is ready to support schools and schoolchildren with digital lessons at home with 500 million euros, as the paper says. An emergency equipment program is planned. This should enable the schools to grant a subsidy of 150 euros to needy pupils for the purchase of appropriate equipment. In addition, the equipment of the schools needed to create professional online courses should be promoted.
Improvements in economic aid
Politicians have already adopted aid programs for the economy worth billions in order to keep jobs and companies. The Federal government had already announced that they would touch up if necessary. Tax relief is now planned for small and medium-sized companies – to ensure liquidity. Specifically, it is about the so-called loss offset. Foreseeable losses for this year should be offset against tax prepayments from the previous year.
Another billion dollar cost
The new aid costs billions. Walter-Borjans spoke of costs “above” 10 billion euros. The VAT reduction in the catering industry alone costs up to 5 billion euros per year, the help for the liquidity of companies around four billion euros. The federal government had already put together massive aid packages for companies, the self-employed and employees. To do this, she plans with new debts amounting to 156 billion euros. Because of the aid packages, Germany’s public debt is increasing significantly. The Ministry of Finance expects the debt ratio – the ratio of debt to total economic output – to be 75.25 percent by the end of the year, as the 2020 stability program shows.
But the end of the flagpole should not yet have been reached. In addition to the acute crisis relief, measures are also planned to boost the economy again. That should also cost billions. However, tax revenues are likely to decline because Germany is slipping into a recession. The new tax estimate is in May.
Production is ramped up again at the Mercedes plant in Stuttgart-Bad Cannstatt.