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German State Opposes Berlin On Tax Cuts

by Ulrika Lomas,, Brussels

26 August 2011

Flouting plans by the federal coalition government in Berlin to reduce taxes in Germany from 2013, the Christian Democratic Union (CDU) party’s finance committee in Saxony-Anhalt has called for nationwide tax rises to be introduced to consolidate the public finances. CDU party leader in the German state, Thomas Webel, has insisted, however, that only a minority of party members back the controversial plans for tax increases.

Determined to conduct talks on generating additional tax revenues for both the federal states and municipalities in Germany, Saxony-Anhalt’s CDU finance committee recently drafted a paper outlining its proposed package of tax measures to be imposed throughout the country.

Among the key fiscal measures contained in the committee’s paper are plans to increase value-added tax (VAT) in Germany by 1%, from 19% to 20%, and to abolish reduced rates of VAT.

Other measures outlined in the paper include plans to raise the top rate of income tax from 42% currently to 50%, to be levied on income in excess of EUR150,000, while reducing the tax burden on low- and middle-income earners, up to an annual income of EUR30,000.

In accordance with the committee’s plans, taxes on capital income and on capital gains derived from securities transactions would rise from 25% to 30%, tax breaks currently benefiting foresters and farmers in Germany would be removed and self-employed individuals would become subject to trade tax.

In July, Germany’s black-yellow coalition government finally united on plans to introduce tax cuts in Germany from 2013, the volume of which is to be determined in the autumn following details of the tax estimate.

TAGS: individuals | capital gains tax (CGT) | tax | investment | value added tax (VAT) | forest investment | Germany | tax breaks | individual income tax

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