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Tax Cuts In Merkel's Election Manifesto

by Ulrika Lomas, Tax-News.com, Brussels

05 July 2017


German Chancellor Angela Merkel's Christian Democrat Union (CDU) has proposed tax cuts worth around EUR15bn (USD17bn) per year in its newly released election manifesto.

In its manifesto, released on July 3, the CDU, currently the largest party in the grand coalition government with the Social Democrat Party (SPD), has pledged to raise the threshold for the current 42 percent top rate of income tax to EUR60,000 from EUR54,000. However, a new tax of 45 percent would be introduced for individuals with income exceeding EUR232,000 per year.

Significantly, the CPD also proposes to eliminate the solidarity tax, which was introduced as a means with which to finance economic development in Eastern Germany following reunification. Currently levied at a rate of 5.5 percent on both corporate and personal income, the solidarity tax would be phased out over a 10-year period from 2020 under the CDU's plans. The solidarity pact, which distributes the revenue to poorer German states in the east of the country, is due to expire in 2019.

The manifesto also mentions EUR2bn in additional tax relief for companies carrying out research and development, and says that Germany and France should look to harmonize their corporate tax regimes.

Elections for the Bundestag, the lower house of parliament, will take place on September 24, 2017, and the CDU currently has a comfortable lead in the polls over its main rival, the SPD.

TAGS: tax | France | Germany | individual income tax | research and development

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