NEWS
Germany's Merkel Pledges Tax Cuts
German Chancellor Angela Merkel is pressing ahead with the promise of tax cuts in the party’s election campaign, despite mounting public debt and an uncertain economic outlook.
With the September election looming, leaders of Germany’s Christian Democratic Union party and Bavarian sister party the Christian Social Union have finally agreed on a tax policy for their campaign. At the heart of the policy are measures designed to alleviate the tax burden borne by both businesses and low to middle income earners after the election.
Despite agreement on a basic concept, a concrete timeframe for implementation of the initiatives, and a means of financing the plans are still to be discussed.
A corner stone of the policy involves a progressive change in income tax rates, in an endeavour to reduce the effects of fiscal drift or “kalte Progression”, a phenomenon whereby monetary depreciation, coupled with unchanged taxes has meant that a larger proportion of tax is levied on high earners.
Reform of income tax would be carried out in two stages. Initially, the lowest rate of income tax would be reduced from 14% to 13%, while then being lowed further to 12%. Regarding the threshold for the top rate of income tax (42%), the Union is proposing a slight increase from the current EUR52,000 to EUR55,000 in the first instance, then finally to EUR60,000.
Other proposals include reform of the (recently reformed) inheritance tax, and measures affecting value added tax. While application of a reduced value added tax rate for the tourist and catering industry is being examined, the top rate of the tax is due to remain unchanged.
The Union intend to present their tax policy at the end of June once all the details have been finalised.
Quelle: Tax-News.com
