As the coalition negotiations between Angela Merkel’s Christian Democratic Union and Guido Westerwelle’s Free Democrats ground on, party leaders on both sides were backing away from the rises, Focus magazine reported.
It had been widely expected that the tax exemption on children would rise from the current €6024 to €8004. And the parties were also said to be negotiating on lifting the monthly child benefit or Kindergeld payment of €164 to €200 per child – a key election promise of the Free Democrats.
Instead, the tax exemption will only be brought into line with inflation by January 2010. Further quick increases were for the time being off the negotiating table, the report said, citing senior party sources.
Instead, the parties wanted to focus on lowering the tax rates for middle income earners.
The report comes amid signs the incoming government will have a much tighter budget to play with than previously thought.