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Germany's FDP Softens Tax Cut Stance

by Ulrika Lomas, Tax-News.com, Brussels

08 November 2017


Germany's Free Democratic Party (FDP) has signaled its intention to compromise on its demand for substantial tax cuts in order to smooth the path towards a coalition agreement.

The FDP had been calling for tax cuts in the order of EUR30bn (USD34.8bn) but now seems to have accepted that that demand was unacceptable to the fiscally conservative Christian Democrat Union, led by Chancellor Angela Merkel, and on November 7 the party indicated that it was softening its stance on tax.

Arguing that tax cuts were long overdue amid consecutive budget surpluses and record tax revenues, the FDP has been calling for "a fundamental rethink in tax policy."

However, the FDP will still attempt to convince the CDU to abolish the solidarity tax, which has helped to fund economic development in the east of Germany.

It remains possible that tax cuts will be included in the coalition agreement, which is currently being negotiated between the CDU, the FDP, and the Green Party - the so-called Jamaica coalition. However, these are likely to be closer to the EUR15bn in tax cuts that the CDU proposed in its election manifesto.

TAGS: tax | law | budget | Germany

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