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FLIGHTS

Could cheap flights in Germany receive a ‘penalty tax’?

The CSU state group in the Bundestag is demanding a "penalty price tax" on cheap flights within Europe in order to cut carbon emissions, according to a Friday media report.

Could cheap flights in Germany receive a 'penalty tax'?
Photo: DPA

Want to fly from Berlin to Venice for €8? Budget airlines such as EasyJet and RyanAir have made this possible with very low fairs.

But now a paper, to be presented at a retreat of the CSU, the Bavarian sister party of Chancellor Angela Merkel's Christian Democrats (CDU) next Tuesday, is proposing that flights costing less than €50 be subject to a penalty tax, according to BILD.

The exact amount of the tax is not yet known. 

“I want climate protection instead of competitive prices,” CSU leader Alexander Dobrindt told the newspaper.

“€9 tickets for flights in Europe have nothing to do with a market economy or climate protection. We want real freedom of choice in mobility through sustainable pricing of offers.”

The CSU, Germany’s third largest political party and dominant party of Bavaria, therefore wants to introduce a minimum price for airline tickets, according to the newspaper. All flights under €50 would be subject to the penalty tax, to be paid by consumers.

“Flying needs a minimum price and rail travel needs a reduction in VAT (an added tax of 19 percent),” Dobrindt said.

The proposal follows on the heels of the Green party’s proposal to put a complete end domestic flights in Germany in order to cut carbon emissions and incentivize more people to travel by train.

READ ALSO: Trains instead of planes? Could domestic flights in Germany really become obsolete?

Hurting consumers?

The federal government's aviation commissioner, Thomas Jarzombek, rejected the CSU's demands, saying it would ultimately harm lower income passengers.

“We agreed in the coalition agreement not to increase taxes,” the CDU politician told DPA. “It must also be carefully examined whether such a regulation would simply lead to planes flying empty and people with low incomes losing mobility without saving CO2”. 

The Federal Association of the German Air Transport Industry (BDL) was open to the discussion, however. 

“In principle, there should be no objections if the politicians were to find an adequate way to put a stop to uneconomical low prices and artificially inflamed demand”, Chief Executive Matthias von Randow told DPA.

'Climate tax bonus'

The CSU is looking at additional incentives in order to cut carbon emissions, as CSU leader Markus Söder proposed a climate tax bonus of up to €10,000 on Friday.

 “We want a climate bonus, which means that climate protection measures should be tax-deductable up to a sum of €10,000,” said the Bavarian Prime Minister to the “Augsburger Allgemeine” on Friday. 

“Each person would be able to deduct 20 percent of the costs directly from income tax if he saves energy – for example by installing a climate-friendly heating system.”

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TAXES

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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