SHARE
COPY LINK

ENERGY

Greens oppose higher commuter allowance for German workers

As Germany's traffic light coalition prepares to consult on steps to combat high fuel prices, opposition to a possible increase in the controversial 'commuters allowance' is coming from the Greens.

Car drivers on A52
Car drivers sit in traffic on the A52 motorway near Düsseldorf. Photo: picture alliance / dpa | Achim Scheidemann

“The commuter allowance is already an environmentally harmful subsidy,” Sven-Christian Kindler, the budgetary spokesman for the Greens parliamentary group, told the Augsburger Allgemeine on Tuesday. “An increase in the commuter allowance would be socially unjust and economically and ecologically counterproductive.”

The SPD, Greens and FDP are meeting on Wednesday to thrash out a set of measures to relieve households who are struggling with high energy costs, with the option of a higher commuter allowance likely to be on the table. 

But Kindler said the commuter allowance would mainly benefit people with higher incomes, and the financial gains wouldn’t be felt until next year’s tax return was submitted. 

“We have to help people with low incomes instead of handing out expensive tax gifts,” he explained. 

A viable package would include the immediate supplement for children from poor families, a fair distribution of the CO2 price between landlords and tenants for heating costs and a one-off payment for people on benefits, the Green politician said.

In an interview with ZDF on Monday, SPD deputy leader and Saarland Economics Minister Anke Rehlinger had spoken out in favour of raising the commuter allowance, which offers tax relief for people who travel long distances to work.

Upping the allowance would be a “quick and effective instrument” to use in the current energy crisis, she said. 

READ ALSO: Households in Germany to get some relief on electricity bills

The idea is also supported by high-profile figures in the pro-business FDP, including Finance Minister Christian Lindner, and by the CDU/CSU-led federal states, who argue that it would ease the burden of fuel costs on rural communities.

According to the Augsburger Allgemeine, SPD financial policy spokesman Michael Schrodi has also expressed scepticism about an increase in the commuter alllowance.

“There are other options on the table,” he said, adding that he preferred direct payments as a means of supporting struggling households.

What is the commuter allowance?

For journeys to work, the tax office currently allows employees to write off 30 cents per kilometre of one-way travel as a deductible expense known as the ‘commuter allowance’.

From the 21st kilometre of commute onwards, 35 cents per kilometre can be deducted – though this is set to go up to 38 cents in 2024.

The commuter allowance can be used regardless of which method of transport people use to get to work, so drivers, public transport users and cyclists can all take advantage of it. 

Green Party budgetary spokesperson Sven-Christian Kindler speaks in the Bundestag in 2017. Kindler is a vocal opponent of the commuter allowance. Photo: picture alliance / dpa | Michael Kappeler

The tax office allows employees to write off €1,000 in annual work-related expenses without any evidence of their actual costs. 

If the expenses go above this level, every additional euro can lower that employee’s tax burden further.

This means that the majority of people only tend to start to benefit from the tax deductions if they travel more than 10km to work each day and therefore exceed the €1,000 threshold as a result of their commute. 

READ ALSO: E-cars and sleeper trains: How Germany’s new government will reform transport

For 2017, according to earlier data from the Federal Statistical Office, around 18.4 million commuters stated that they drove at least part of the distance to work by car and 7.5 million commuters had a commute of more than 20 kilometres.

A higher commuter allowance is controversial, especially among the Greens, as they say that it offers a tax incentive for long car journeys and benefits just a small number of higher earners.

The CDU/CSU want the flat rate to be upped to 38 cents per kilometre and adjusted to match developments in the CO2 tax.

The IG BCE trade union, which advocates for workers in the mining, ceramics and energy sectors, wants the commuter allowance to go up to 40 cents per kilometre for the current tax year.

Vocabulary 

commuter allowance – (die) Pendlerpauschale 

to dispense / hand out – verteilen 

harmful to the environment – umweltschädlich

effective – wirksam 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

MONEY

Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 

READ ALSO:

What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life

SHOW COMMENTS