The German government approved further savings plans on Monday to ease the burden on the 2024 budget, a government spokesperson said on Monday.
The savings decisions follow weeks of haggling over how to fill a 17 billion euro ($19 billion) gap in the budget after a November court ruling threw the government's financing framework into turmoil.
The plans include cuts to subsidies for agricultural diesel, a higher air traffic tax and changes in benefits.
TAX BREAK ON AGRICULTURAL DIESEL
Rather than abruptly ending the farmers' tax break on agricultural diesel as initially announced, the subsidy will be reduced by 40% this year, by 30% in 2025, and will end from 2026.
However, the watering down of the proposal was not enough for German farmers, who kicked off a week of nationwide protests by blocking roads with tractors on Monday.
Farmers will feel the effects from 2025 because the reimbursement is always paid in the following year. The Ministry of Finance is therefore expecting additional income of around 142 million euros in 2025, 285 million euros in 2026 and 419 million euros in 2027.
From 2028, the additional revenue is expected to amount to 453 million euros per year.
AIR TRAFFIC TAX
According to a document seen by Reuters, higher air traffic tax is expected to generate additional revenue of 445 million euros in 2024.
SOCIAL PAYMENTS
Stricter sanctions for recipients of social benefits are expected to save 170 million euros, according to the document. Those who do repeatedly fail to comply with certain government requirements of employment centres would lose their citizen's benefit.
The abolition of a bonus in the citizen's benefit for further training is expected to save a further 100 million euros.
The Federal Employment Agency will repay to the government some of the money received during the coronavirus crisis. This reimbursement amounts to 1.5 billion euros per year in 2024 and 2025.
($1 = 0.9136 euros)
