The federal government continues its strict fiscal policy and has decided on another austerity package on Monday. The focus is on cuts to agricultural diesel subsidies, an increase in air travel taxes, and stricter sanctions for social welfare. The goal is to relieve the federal budget by 2024. As confirmed by a government representative to the news agency Reuters, the austerity plan was adopted by the cabinet using a written circulation procedure.

Controversial proposed regulation for basic income

Costs for accommodation and heating will not be affected by this. In addition, the citizen's welfare bonus of 75 euros per month, which was introduced for non-degree related further education, will be abolished again. This is expected to save a further 100 million euros. Further education aimed at a vocational qualification will continue to be supported with 150 euros per month, and there will continue to be bonuses for successfully passed exams.

To further relieve the federal budget, the Federal Employment Agency should also transfer 1.5 billion euros to the federal government each year from 2024 to 2027. The additional revenue from the higher air traffic tax should amount to 445 million euros from 2024 onwards. The tax, which must be paid by passengers departing from German airports, will increase between 15.53 euros and 70.83 euros per ticket depending on the destination of the trip.

The airlines bear the costs, but can pass them on to the passengers. The planned abolition of the subsidy for agricultural diesel from 2024 is causing outrage, especially among farmers. This subsidy has been in place since 1951 and includes a partial refund of the diesel tax to farmers.

From 2025, the reimbursement will gradually be reduced by a total of 100 percent and finally completely abolished from 2027. The effect will be noticeable from 2025, as repayments always occur in the following year. The Ministry of Finance estimates that this will result in additional revenue of 142 million euros in 2025, 285 million euros in 2026, and 419 million euros in 2027.

From 2028, the annual additional income is expected to be EUR 453 million. The so-called "formulation aids" for the second budget financing law, which is to be introduced by the traffic light coalition of the SPD, Greens, and FDP, were approved by the cabinet.

A hearing on this matter will take place on Thursday in the Budget Committee of the Bundestag. The law is expected to be passed in the Bundestag on February 2nd, along with the budget for 2024. With these measures, the federal government continues its course of budget consolidation and continues to strive for a solid fiscal policy.