Berlin The corona crisis has provided new aid worth billions for workers, restaurants, businesses and schools. The leaders of the black-red coalition agreed on this late Wednesday evening.
Short-time work benefits are to be increased in order to compensate for loss of income and to prevent social hardship, especially for low-income earners. At the same time, the duration of unemployment benefits is extended. The restaurants that are particularly hard hit by the crisis are getting tax relief.
The federal government must take further measures to cushion social and economic hardship and support economic reconstruction, according to a decision paper.
CDU chief Annegret Kramp-Karrenbauer spoke of “very intensive negotiations”, which dealt with difficult detailed questions. But she is “very happy and satisfied with the result”. The corona pandemic had “dramatically changed people’s lives.”
CSU boss Markus Söder also spoke of “thick boards” that had to be pierced. Although he would have liked a longer period for the lowering of VAT for the catering trade, he was satisfied with the “incentive program” found. In total, the industry will be relieved of around four billion euros.
SPD chairman Norbert Walter-Borjans said important decisions had been taken for companies and workers who were suffering from losses. It was worthwhile to sit together longer than expected and to discuss considerably controversially.
SPD leader Saskia Esken praised the decision to support students in home lessons. Many families are currently not yet equipped for lessons at home, but it is important to have education and participation, said Esken on Thursday night in Berlin.
The government parties agreed:
Raising short-time work benefits: Due to the severe economic consequences of the corona crisis, hundreds of thousands of employees 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.
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 twelve months so far, this applies to employees up to 50 years of age – provided 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.
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 a resolution, the value added tax for food in the catering trade will be reduced from July 1 to June 30, 2021 to the reduced tax rate of seven 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 seven percent. Now a rate of seven percent should generally apply.
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 it would make improvements if necessary.
Tax relief is now planned for small and medium-sized companies – to ensure liquidity. Specifically, it is about the so-called loss offsetting. Foreseeable losses for this year should be offset against tax prepayments from the previous year.
Aid measures for ten billion euros
The new aid costs billions. SPD leader Walter-Borjans spoke of costs in the amount of “above” ten billion euros, the value added tax reduction in the catering industry alone costs up to five billion a year, the help for the liquidity of the companies around four billion.
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 of 156 billion euros.
Because of the aid packages, Germany’s public debt is increasing significantly. The Ministry of Finance expects the debt ratio – i.e. 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.
The consultations took place in the international conference room of the Chancellor’s Office because of the spacing rules necessary in the pandemic and, due to differences in content, took almost eight hours longer than originally planned.
In addition to the party and faction leaders of the CDU, CSU and SPD, foreign minister Heiko Maas and finance minister Olaf Scholz (both SPD) also took part in the meeting at the Chancellery.
More: Read all current developments regarding the corona pandemic here.