German Opposition Presents Tax Cut Manifesto

by Ulrika Lomas, Tax-News.com, Brussels

08 April 2002

Germany's pro-business opposition, the Free Democrats, have promised a programme of tax cuts and subsidy reductions if they are successful in the September general election.

In a 77 page draft paper due to be presented today, the party lays out its manifesto promises, which include:

- The simplification of the current sliding scale of income tax to three bands of 15%, 25%, and 35%

- The introduction of a tax-free allowance of 7,500 euros per year for all citizens

- The abolition of local taxes on companies and the 'ecology tax' on fuel and vehicles

- No increases in the current rate of inheritance tax

The document also reveals that the FDP intends to reduce all state subsidies by 20% from fiscal 2003, and scrap coal subsidies by 2005, reasoning that: 'If the state lowers its revenues through tax cuts then it cannot stay at the current level of state spending'. The Free Democrats have predicted that despite the raft of tax cuts proposed in their draft manifesto, the Federal budget could still be balanced in five years, after which they argue, the government should not borrow again.

Pundits feel that the FDP is a strong candidate for a return to government as a junior partner, given declining support for the Green party which is currently ruling in coalition with the Social Democrats.

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