Germany's SPD Seeks Massive Tax Rises

by Ulrika Lomas, Tax-News.com, Brussels

09 September 2011

Ahead of the forthcoming elections in Germany in 2013, the Social Democrats (SPD) recently unveiled details of their fiscal concept, in which the party pledges to dramatically increase taxation in order to reduce new debt, and, most notably, to significantly increase the fiscal burden on the rich.

Clearly and deliberately setting itself apart from the current black-yellow coalition parties, the SPD underscores in its release that it does not plan to cut taxes and provides its assurances that there will be “no policy on credit”. Rather than lowering taxes for hoteliers, heirs and top earners in Germany, the Social Democrats aim to swiftly reduce debt and to increase investment in education and care.

Despite the good current economic climate, the SPD underlines the need to consolidate the public budgets as quickly as possible. Warning against “irresponsible tax cuts”, as proposed by and currently under discussion within the ruling Christian Democratic Union (CDU) and Free Democratic Party (FDP), the SPD intends to invest over EUR5bn in reducing state debt, by generating additional revenues from economic growth and tax rises.

The SPD aims to abolish the tax break currently benefiting hotels in Germany, to increase the top rate of income tax to 49% from EUR100,000, and to increase the government’s nuclear fuel tax.

Other proposed fiscal measures include plans to cut subsidies by around EUR15bn, to clamp down on tax evasion, to reintroduce wealth tax in Germany and to reform inheritance tax.

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