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Germany Committed To Pursuit Of Tax Reform

by Ulrika Lomas,, Brussels

05 December 2011

The German government has dismissed claims that it has abandoned plans for further vital tax reforms in Germany in this legislative period.

The comments followed hot on the heels of reports suggesting that German Finance Minister Wolfgang Schäuble had decided to put on ice plans to reform three key areas of German tax law, namely to reform the existing system of corporation tax, to overhaul the value-added tax (VAT) system, as well as to introduce a second tax simplification package.

Government spokesman Steffen Seibert vehemently rejected the claims, insisting that the black-yellow coalition is indeed still pursuing its fiscal objectives in order of priority, and underscoring that the government’s top priority is to first of all implement the “not insignificant” EUR6bn (USD8bn) reduction in income tax from January 1, 2013.

Plans to simplify the VAT system, as laid down in the coalition agreement, also remain very much on the government’s agenda, Seibert added.

As part of the coalition agreement, ruling partners the Free Democratic Party (FDP) and the Christian Democratic Union (CDU) party united on plans to examine the reduced rates of VAT imposed on certain product groups.

While conceding that a commission has not as yet been tasked with the role of reviewing the reduced VAT rates, Martin Kotthaus, spokesman for Finance Minister Schäuble pointed out that there are, however, still two years to go before the end of the current legislative period.

Underlining the need to make improvements in the area of corporate taxation, Kotthaus alluded to the fact that work is currently ongoing at European level on the issue, and in particular to plans to harmonize the country’s system with that of France.

Warning against a slackening off of efforts as regards fiscal reform, the FDP’s General Secretary Christian Lindner insisted that the party would not reduce its efforts to implement further tax simplification measures.

Echoing these views, Reiner Holznagel, of the German Association of Taxpayers (der Bund der Steuerzahler – BdSt) explained that it would be “more than disappointing” if government plans to radically reform tax policy were only pursued in a half-hearted manner.

TAGS: tax | value added tax (VAT) | law | corporation tax | France | Germany | tax reform | individual income tax

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