Germany Uphelds 1,000 Euro Tax-Free Bonus Plan for Workers Amid Opposition
Government's Decision and Reactions
BERLIN, May 8 (Reuters) - The German government said on Friday it would stick to its plan for employers to provide a voluntary tax-free relief bonus of up to 1,000 euros ($1,177) to workers, after the proposal failed to garner enough support from regional states.
Background of the Tax-Free Bonus Plan
The bonus is part of a package to cushion the impact of higher energy prices due to the war in Iran.
Key Features of the Proposal
• The plan was for employers to be able to pay the bonus to their employees without taxes or social security contributions.
Opposition from Federal States
• The 16 federal states, which have a say on many issues in the Bundesrat, or upper house of parliament, expect a loss of tax revenue due to the measure, which was proposed by Chancellor Friedrich Merz's governing coalition.
Next Steps and Possible Outcomes
Government Commitment and Future Actions
• The government remains committed to the plan to provide relief for citizens and will decide on the next steps in the process shortly, a spokesperson said.
Potential for Parliamentary Mediation
• The plan may be referred to a parliamentary mediation committee, where a compromise could still be reached.
($1 = 0.8497 euros)
(Reporting by Markus Wacket, writing by Linda Pasquini, editing by Thomas Seythal)
