Eichel Rejects Calls For Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

09 March 2004

German Finance Minister Hans Eichel stated in a television interview on Sunday that there will be no room for additional tax cuts after those scheduled for 2005, and dismissed opposition calls for a radical overhaul of the tax system.

"All the models out there show they would need to be financed through higher borrowing and they would also relieve the upper incomes far more than the lower incomes," Eichel argued.

He added: "Everyone will be getting a tax reduction next year but a further cut beyond that cannot be financed."

Eichel's comments come in the wake of statements by Friedrich Merz, the opposition Christian Democrat's economic expert, who is driving the centre-right party's campaign for a much-needed simplification of Germany's taxation system.

"We want a radically simplified tax system. It would be so radically simple that people could understand it again," commented Merz in recent reports.

In the recent round of tax cuts, the top rate of income tax was cut from 48.5% to 45%, and will fall to 42% by 2005. Meanwhile, the lowest income tax band was reduced, from 19.9% to 16%. This will also fall further in 2005, to 15%.

Recommended