Federal Cabinet Approves Mechanism for Direct Payment of Public Funds
The federal cabinet has agreed on the key points of a mechanism for the direct payment of public funds on Wednesday. The grand coalition had agreed in the coalition treaty to establish such a mechanism in order to pay a climate allowance as a social compensation for the CO2 price in the future. No payments are currently planned.
With the decision, a reliable framework for a payment mechanism is being created, through which funds can be paid “directly, securely, and non-bureaucratically” to citizens in Germany, said Federal Finance Minister Jörg Kukies (SPD). “We can thus quickly and targetedly support people. Such largely automated direct payments by the federal government can also contribute to the more efficient use of public funds.” The federal government’s goal is to make the basic mechanism, which makes lump-sum payments possible, available by the end of the year.
During the Corona pandemic and in other crises, the federal government has passed comprehensive “relief and support packages.” However, it has been hindered by the fact that the federal government has not had a direct way to quickly and targetedly provide financial benefits to citizens until now. This has resulted in some groups being overlooked in the aid.
The basic mechanism is open to interfaces, which could enable largely automated, for example, income-dependent payments in the future, according to the Federal Ministry of Finance. The core element of the mechanism is the updating of the bank account information in the tax ID database at the Federal Central Authority for Taxes. The legal framework for this is in place and the updating is already underway. Over 13.9 million bank account connections have been stored at the Federal Central Authority for Taxes via the family office. Citizens can update their IBAN since November 27 through the BOP portal at the Federal Central Authority for Taxes and through “Elster” independently. Furthermore, the consent can be declared to the house bank, which will then transmit the IBAN to the Federal Central Authority for Taxes.
The Green Party’s election program for the 2025 federal election includes the demand for a climate allowance, while the SPD’s program does not specify a concrete way for a social compensation for the CO2 price. The Union wants to use the revenue from the CO2 tax not for direct payments, but to finance a reduction in the electricity tax and the network charges.