Germany's SPD Party Unveils Tax Policy

by Ulrika Lomas, Tax-News.com, Brussels

23 June 2009

Vehemently criticising the Christian Democratic Union party for its indecision and incessant internal bickering, coupled with its pledge to introduce tax measures favourable to top income earners, despite an expected shortfall in tax revenue of over EUR300bn, Germany’s rival Social Democratic Party (SPD) has finally unveiled details of its tax policy in the run up to the September elections.

Designed to alleviate the tax burden borne by low to middle income earners, the SPD is pledging to reduce social contributions from around 39% to 36%, since although 50% of the population do not currently pay income tax, all employees are obliged to pay social contributions.

In a bid to generate more money to invest in better training, the SPD is intending to increase the burden on top earners, who account for approximately 1.5% of all taxpayers in Germany. Not only is the party eager to lower the threshold for the top rate of income tax (42%), but it is also currently examining a proposal to reintroduce wealth tax.

Intended to curb reckless financial speculation and to help contribute to future investment and training, the SPD is also eager to embed a stock market sales tax at the heart of its election campaign. Based on the British model, a proposed sales tax of 0.5% would be levied on stocks and shares, generating billions for the State.

The SPD is also eager to improve tax enforcement, combat tax evasion and increase pressure on tax havens in a drive to prevent further losses in tax revenue from Germany’s “rich and superrich” – which they say annually amounts to around EUR100bn.

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