German Opposition Would Review CGT Reforms

by Ulrika Lomas, Tax-News.com, Brussels

07 May 2002

German Opposition leader Edmund Stoiber has said that he would consider reversing the abolition of corporate capital gains tax if he beats Gerhard Schroeder to become chancellor in September's general election.

The CDU's election manifesto, published yesterday, says a Stoiber government would cut the top and bottom rates of taxation, as well as phase out the current government coalition's environmental tax in the medium term.

"The tax free sales of holdings will be put under review due to its impact on taxation income and with respect to fair treatment," the CDU and its Bavarian sister, the CSU, said in the document. Smaller companies had complained that the reforms applied only to corporate behemoths and that they (the famed Mittelstand) were excluded from its impact.

The reforms of corporate taxation, which had a troubled passage through parliament and were considerably weakened from their original form, were nonetheless hailed as a major step forward in modernising Germany's antiquated economic structure, with cross-holdings which bind together most major corporations in a defensive alliance. Weak economic conditions have prevented the new law from having a major effect so far, although some banks have begun to reduce their industrial holdings.

The manifesto says that a Stoiber government would also gradually cut the top rate of tax from its current level of 48% to under 40%, while the bottom rate would be reduced to under 15%.

The manifesto reaffirmed Germany's support for the EU's stability and growth pact, and proposed the adoption of a similar national pact to keep the budgets of the federal states in order.

Recommended