The state wants the citizen database - but it fails because of the account number

A wave of indignation has been rushing through the country since Monday: How can it be that everyone is benefiting from the gas price brake, the pool owner even more than the residents of an apartment building? "If we wanted to be fast, we now had to use the watering can," said trade unionist Michael Vassiliadis, one of the chairmen of the government-appointed expert commission, defending the proposed model. He was not comfortable with that, he admitted. But there was no other option.

Vassiliadis and his colleagues on the Commission would have liked to have already used an instrument that the legislature is only just dealing with: a procedure with which the state can pay out public services to specific groups of the population - even to those who are not already receiving transfer payments such as child benefit, basic security or get a pension.

On Friday, the members of the Bundestag will discuss the simplest stage of such a mechanism in the first reading. It is already described in great detail in the draft of the Annual Tax Act 2022. But even with the simplest form of such a procedure, there are doubts that it will ever be implemented in practice. Not only privacy advocates should have reservations. The banks that hold the accounts are also resisting the government's plan to take part in the necessary data collection.

In order for the state to be able to pay out money to its citizens at all, it needs to know where the money is going. He needs an account number from everyone - and not only does it have to be up-to-date, it also has to be ensured that nobody collects the money twice.

The draft law envisages that, as a first step, the account numbers of all citizens will be stored centrally at the Federal Central Tax Office and linked to the tax identification number that already exists there. The current registration address is also stored with the ID. Every baby in Germany already has such a tax code.

So far, so clear. But already with the question of how the account number comes to the tax ID and the registration address, it becomes critical. If the federal government has its way, it should go through the banks. According to the proposal for the new paragraph 139b of the tax code, "natural persons of full age" should be able to go to their bank and instruct them to report the account to which the state benefits are to flow to the Federal Central Tax Office. The credit institutions would have to provide a "suitable procedure" for this, according to the government draft.

Bank representatives, however, do not see why they should do government work. "The German banking industry speaks out against the planned obligation of German banks and savings banks to such a reporting procedure," said the umbrella organization of the banks WELT. There they are opposed to the government's attempt to transfer state tasks to the private sector.

The administration actually has all the necessary data, it is said, for example, an account number is part of the master data that is permanently stored for each taxpayer by his tax authority. "These data only have to be brought together at the Federal Central Tax Office," say the representatives of the domestic banking industry. Remaining cases in which the authorities do not report the account details could be reported directly by the citizens.

The Federal Ministry of Finance defends the proposal that banks should be obliged to participate in data collection. The reasoning is not very flattering for the German administration: Only the credit institutions had the most up-to-date account data for the citizens, the ministry said, while other government agencies such as the tax authorities were not sure of this.

The current draft law only mentions one public body that should help: the family benefits office. You should report the account numbers for all minors. The current bank details are available in the cases, but the child benefit is transferred regularly.

Another possible registration office, on the other hand, has already been deleted: the German pension insurance. In an early draft of the law, it was still intended that the statutory pension insurance institutions would transmit the IBAN for recipients of old-age pensions to the Federal Central Office. No pensioner would have had to instruct their bank to transfer their account details.

During the coordination between the ministries, however, this was abandoned due to pressure from the pension insurance. They had advocated choosing the "simple and transparent way" of transmitting account details via banks for pensioners as well.

"The need to create a separate transmission path for the account connection from the pension insurance to the Federal Central Tax Office was not seen," said the German Pension Insurance Association. Apparently, the administrative effort there was judged to be too high – and they are happy to leave it to the banks.

This could change again in the further legislative process. At least in the ranks of the opposition, the current draft is considered insufficient. The CDU/CSU basically praises the plan to establish an abuse-proof system for paying state support to everyone. "However, the federal government should initially rely on the data sources that the administration already has," said Antje Tillmann, the Union's financial policy spokeswoman in the Bundestag. Everything else only burdens citizens and banks additionally.

The legislator must also fear data protection concerns. Especially since the merging of tax and account numbers can only be the first step. The planned change to the annual tax law may be sufficient for an instrument for paying out a uniform climate money to compensate for CO₂ pricing, as was planned before the current energy crisis and is also anchored in the coalition agreement of the traffic light government.

However, the Gas Price Commission has already made it clear that further characteristics would have to be brought together and stored for targeted differentiation between different consumer groups. Household income and household size would certainly have to be included. Before such a huge database with all this information is created at the Federal Central Tax Office, there is still a lot of work for everyone involved.

Finance Minister Christian Lindner (FDP) had already announced in June that even if the legal basis for a flat-rate payment mechanism was created this year, the technical implementation "certainly cannot be completed in 2023".

Vassiliadis and his colleagues from the Gas Price Commission would not be any further in 2024 than they are today. Even then, due to a lack of other distinguishing features in the data records, no other subsidy could be paid to the pool owner than to the resident of an apartment building.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.