According to a government source, the German cabinet approved a tax relief package for employees and businesses on Wednesday. This hopes to reduce the impact of the pandemic on Europe’s largest economy with a new stimulus.

The Fourth Corona Tax Relief Act includes a 3,000-euro bonus tax exemption for care workers. Moreover, it offers a slew of tax relief measures for businesses, in a package worth a total of 11 billion euros ($12.51 billion) through 2025.

The German economy finished the year on a shaky note, declining by 0.7 percent in the fourth quarter. This resulted after limitations imposed in the autumn to combat the fourth COVID-19 wave, as well as supply chain disruptions.

The German cabinet hopes that the new package would help the economy recover.

The law includes provisions that would allow businesses to deduct certain investments from their taxes more rapidly in 2022. Plus, they are able to balance losses against prior profits to a larger extent than before, lowering their taxes in earlier years.

According to the employer-friendly German Economic Institute, the labor force will fall by over 300,000 people this year as more older workers retire than younger workers enter the workforce.

This gap is predicted to expand to more than 650,000 persons by 2029, resulting in a 5-million-strong workforce deficit by 2030. Despite the coronavirus epidemic, the number of employed Germans increased to approximately 45 million in 2021.

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(Holger Hansen contributed reporting; Paul Carrel wrote the piece; Madeline Chambers edited it.)

Source: Reuters.com