German Opposition Will Not Support Changes To Corporate Tax Rules

by Ulrika Lomas, Tax-News.com, Brussels

23 June 2004

Dealing something of a blow to the ruling Social Democrats, a senior German opposition lawmaker has rejected the possibility of a change in corporate tax law to prevent firms like Vodafone from claiming huge tax credits for asset write downs.

Speaking to Reuters last week, Joachim Poss, a deputy leader of the SPD’s parliamentary group, revealed that the party is exploring ways in which the tax system can be tightened to mitigate against loss of revenues, including limiting the amount of losses firms can offset against their tax bill to 50% instead of 60%.

However, in comments made to German daily newspaper Handelsblatt this week, Gerhard Stratthaus, finance minister of the state of Baden-Wuerttemberg and a member of the Christian Democrat Union (CDU), stated that the opposition-controlled upper house of parliament would not be prepared to support such a move.

"It's a populistic manoeuvre to calm the SPD's grass roots,” Stratthaus argued in the report. “Viewed over a long period of time it won't achieve anything except to stretch out the period of time over which losses can be carried over."

He added that the CDU would “under no circumstances” support a further change in the rules, especially as thay were amended only last year.

"If we change this again and by trying to make it retroactive then it would be a step back in time to the days before we had a state of law," Stratthaus was quoted as observing.

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