German Opposition Awaits Government Response To Tax Plans

by Ulrika Lomas, Tax-News.com, Brussels

28 January 2004

Germany’s opposition parties urged the Schroeder government on Monday to accept a radical tax simplification plan that they claim will reduce the nation's tax burden by some EUR10 billion.

The opposition parties, dominated by the Christian Democrat Union and Bavarian sister party the Christian Social Union, hold a significant amount of leverage over German tax policy thanks to their majority in the Bundesrat, or upper house. Consequently, Chancellor Schroeder has made repeated attempts to discuss a deal with the opposition.

However, whilst there would appear to be a broad political consensus that changes are needed to simplify the country’s notoriously tangled tax code, it seems that an agreement at parliamentary level is still some way off.

Christian Democrat Union leader Angela Merkel has indicated that a deal is not likely until at least 2005, as the CDU awaits the government’s own proposals on the issue.

After talks with the CSU on Monday, Merkel announced: "We had a very good discussion which sent a clear signal of our unity and it's up to the government now."

The two conservative parties have yet to issue a detailed breakdown of their tax plans, although they have revealed that they plan to talk with local governments on a possible replacement to local business taxes. They have also tabled ideas to overhaul inheritance taxes to make the system fairer for small firms.

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