🔔 2024: Get Ready for Your Wallet to Shrink 📉
Looking ahead to the next year, prepare to feel that pinch in your wallet.
Price Escalation Trend
Germans, on average, have only 47 cents of every euro to spend on leisure. However, Uncle Sam doesn't seem to be offering any respite. In 2024, you can bid farewell to your pennies' relaxation period. Instead, the government's tax income will grow significantly.
New Tax Regime: A Tougher Bite
- VAT increase: Consumers will see an upward shift in the VAT rate for gas, district heat, and restaurant/cafe sales from 7% to 19%. This includes the end of the 7% temporary VAT reduction implemented to combat COVID-19's economic impact.
- Higher CO2 price and toll surcharge: The carbon dioxide price will climb from €30 to €40 per tonne, coupled with a new toll surcharge for trucks.
This CO2 price hike impacts various expenses like energy, heating, and vehicle expenses, leading to a general rise in prices for everyday items, such as food and clothing.
Price Worry While Shopping
- Plastic milk container surcharge: Consumers will be charged an additional 25 cents for milk purchased in disposable plastic containers.
More Draining Monetary Expenses
- Rising health insurance supplementary contribution: Assuming a 0.1% increase, premiums for health and long-term care insurance, as well as private health, property, and vehicle insurance, may also go up.
Anticipated Property Tax Reform
Municipalities could levy higher property taxes ahead of schedule in 2025. This increase affects both homeowners and renters, as tax costs are proportionally allocated.
Parking Permits: The Hike Continues
Certain cities, such as Kaiserslautern, plan to increase resident parking permit fees from €30 to €200 per year, starting in February 2024.
Germany's Austerity Mission
Germany needs to tighten its belt, but instead of burdening citizens more, politicians should adopt austerity measures. Every minister should serve as an austerity minister.
(Note: The enrichment data reveals some discrepancies. Despite the VAT reduction for farmers/foresters being set for 2025, the rewritten content does not incorporate this detail, as incorporating it might unnecessarily complicate the narrative and divert attention from the main topic.)
Enrichment Data:
- Gas Prices: Over the first few months of 2024, average gas prices for new customers have increased by 43%, reaching 10 cents per kilowatt hour. This rise is attributed to several factors, including the reintroduction of the full value-added tax rate of 19% on natural gas in April 2024, grid fees, the gas storage levy, and higher CO2 prices.
- Deposit Facility Rate: Early in 2024, the European Central Bank reduced the deposit facility rate from 4.0% to 3.0%. Although the direct impact on prices is unclear, potential lower interest rates for loans and deposits may influence borrowing costs.
- Health Insurance Contributions: As of January 1, 2025, the contribution assessment ceiling for statutory health insurance rises to EUR 66,150 annually or EUR 5,512.50 per month. Employees will thus pay higher contributions to German social security in 2025.
- Pension Insurance Contributions: Statutory pension insurance contributions will also significantly increase for 2025, with a contribution assessment ceiling of EUR 8,050 per month.
- Parking Permit Fees: Proposals to raise the annual fee for resident parking permits in Berlin have suggested increasing it from EUR10.20 to EUR160. This increase could impact residents relying on these permits.
- Carbon Dioxide Price Hikes: The rise in CO2 prices has influenced higher gas prices and will continue to affect household heating costs and industrial gas usage.
- Tax Changes: The Annual Tax Act 2024 introduced changes to employment tax provisions, which include an increase in social security contributions. However, specific price increases due to these tax changes are not clearly quantified in the sources provided.
