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Free Democrats pick new fight over airport tax

The ruling coalition partners face a fresh round of squabbling after the Free Democrats called on Friday for changes to the proposed airport tax announced just weeks ago as part of Chancellor Angela Merkel's austerity package.

Free Democrats pick new fight over airport tax
Photo: DPA

Free Democrat (FDP) deputy parliamentary leader Patrick Döring told daily Bild the tax needed an overhaul. It was not fair, he said, that ordinary people going on holiday had to fork out extra charges while private jets got to avoid the tax.

He also demanded that business travellers and the wealthy pay a fairer share of the burden.

“First class travellers must pay more,” he said. “This way, the charge for the ordinary passenger can clearly be lowered.”

Under the present plan, passengers leaving German airports would pay a flat rate of €13 for short flights and €26 for long-haul flights. Transit passengers, freight, military flights and private jets are all exempt.

Chancellor Merkel’s centre-right coalition announced the charges just over a month ago as part of its effort would slash €80 billion from the budget by 2014. The airport tax would aim to raise €1 billion a year to funnel into the government’s severely drained coffers.

Döring’s criticism is the latest in a series of public rows between Merkel’s conservative Christian Democrats and their junior coalition partners, the FDP, with many of the disagreements centring on tax policy.

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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