Ministerial Council launches economic stimulus act
Finance Minister Blümel: relieve people, create jobs, boost optimism. This is the basis for a return to prosperity.
“We intend to implement measures that relieve people. We want to enable companies to create jobs again and we want to be able to look to the future with some optimism. That’s the basis for a return to prosperity,” said Finance Minister Gernot Blümel at today’s press conference after the Ministerial Council.
Today’s Ministerial Council finalised the details of the Economic Stimulus Act 2020 (Konjunkturstärkungsgesetz, KonStG). Among other things, it provides for a reduction of wage and income tax from 25% to 20%, a measure that had already been laid out in the government programme but is now being brought forward. “We want to relieve the burden on people, especially at the present time, so that they have more to live on. We also want to stimulate the economy on the demand side, so that people are aware they can shop and consume again, because that creates sustainable jobs”, Finance Minister Blümel added. The measure will apply retrospectively from 1 January 2020 and will amount to relief of up to €350 per year, which will be paid out from September. For smaller incomes of up to €11,000 per year, the so-called negative tax of up to €100 applies.
In respect of short-time working, it was clarified that 13th and 14th month payments will be made in full, so that employees who have not been receiving their full salary over a longer period of time will still get their Christmas and holiday monies. At the same time, the top tax rate of 55% for incomes above €1 million has been extended until 2025.
In the area of economic activity, the bill includes a loss carryback so that losses from the coronavirus year can be offset against profits from 2019 and 2018. The maximum amount that can be carried back is €5 million. Tax deferrals have been extended to next year. This means that €6.5 billion in liquidity will continue to be available to businesses until next year.
“The declining balance depreciation option is a small economic revolution”, continued Finance Minister Blümel. From 1 July 2020, it will be possible for capital goods to be depreciated at up to 30% from the first year onwards, together with 30% of their book value. This measure will apply indefinitely and should prove to be a massive incentive for future investment. Another new feature added after the review is the possibility to apply the declining-balance depreciation to electric vehicles.