Austerity measures: Bundestag votes on budget for 2024

Austerity measures: Bundestag votes on budget for 2024

It was a long struggle within the traffic lights. Now the budget for the current year is to be passed. The Bundestag is also voting on controversial savings for farmers.

Today the Bundestag is taking its final vote on the 2024 federal budget. The controversial gradual abolition of tax relief for agricultural diesel is also to be passed – this is part of the Budget Financing Act. With this, the traffic light coalition of the SPD, Greens and FDP wants to implement austerity measures.

The law still has to pass the Federal Council. However, the state chamber is not currently dealing with the budget financing law and thus the end of agricultural diesel subsidies.

Key points of the budget

The 2024 budget plans to spend 476.8 billion euros – and initially new loans of around 39 billion euros. If it stays that way, the debt brake would be adhered to for the first time since the outbreak of the corona pandemic, because the regulation in the Basic Law allows a certain amount of leeway in the event of poor economic expectations. The Federal Council is also expected to give the green light for the budget later today.

The federal budget for 2024 presented the traffic light coalition with a particular challenge. After the Federal Constitutional Court’s ruling, billions of dollars in holes suddenly had to be plugged in the core budget and in the climate and transformation fund shortly before the end of the year.

Labor Minister Hubertus Heil (SPD) has by far the largest budget with around 175.6 billion euros – large parts of which go to pension insurance, as well as expenses for citizens’ money, for example.

A total of 70.5 billion euros is planned to be invested – for example in the rail network and roads. The defense budget is around 52 billion euros, plus billions in funds from the special fund for the Bundeswehr.

Austerity measures

The SPD, Greens and FDP also agreed on a budget financing law. In addition to the gradual abolition of tax advantages for agricultural diesel for farmers, this also provides for a higher ticket tax for passenger flights. This ensures additional revenue for the federal government.

However, the Federal Council did not agree to shortening the deadline. The law will initially be discussed in specialist committees in the Federal Council. The next regular meeting of the Federal Council is scheduled for March 22nd.

The Federal Council does not have to agree to the law, but could object and appeal to the mediation committee. However, in many states there are coalition governments with traffic light parties – and if a state government disagrees, the state must abstain from the Bundesrat or cannot agree.

The Bundestag is also voting on a proposal from the CDU/CSU parliamentary group. In it, the Union calls for the agricultural diesel tax relief not to be canceled. Group deputy Steffen Bilger said the traffic light decision was a “slap in the face” to farmers. The government seems to be completely indifferent to the massive and widely supported protest by the peasantry. The AfD parliamentary group is also calling for an end to the agricultural diesel subsidy in a motion.

Debt brake

It has not yet been finally decided whether the debt brake will actually last. The traffic light coalition can raise 2.7 billion euros in flood aid after the flood disaster in the Ahr Valley from surpluses in the 2023 budget. But the war in Ukraine and the shaky support from the USA for the country attacked by Russia bring uncertainty. If Germany has to step in much more strongly than previously planned, the SPD and the Greens in particular want to talk again about an exception to the debt brake.

But that’s not the only new budget dispute on the horizon. Discussions are already underway for the 2025 budget – and they are unlikely to be easy either. There is once again a gap in the core budget alone in the double-digit billion range.

Source: Stern

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