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Germany's Liberals Stay Focussed On Fiscal Drift

25 April 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (Tax-News.com, Brussels)

Germany's Economy Minister and Free Democratic Party (FDP) leader Philipp Rösler has recently underlined his party's commitment to reducing the fiscal burden on individuals in Germany, given the positive economic climate.

Insisting that Germany can now look "optimistically to the future," Rösler highlighted the fact that the country's economy has largely overcome the economic downturn and is growing again. Alluding to the fact that growth of well above 1% is expected by 2014 at the very latest, Rösler emphasized that the FDP intends to exploit this situation and make use of additional tax revenues to continue reducing state debt and to provide fiscal relief to low- and middle-income groups.

The FDP aims to further mitigate the effects of fiscal drift in the country’s income tax system, Rösler made clear, pointing out that the Opposition parties have up to now thwarted coalition plans to address the phenomenon.

Although the German Bundesrat, or upper house of parliament, finally waved through plans to increase the basic tax-free allowance at the beginning of the year, Social Democrat-led states blocked Government plans to increase income tax bands by a total of 4.4% at the same time.

Rösler also revealed FDP plans to progressively scale back the country's solidarity tax, and stressed the Liberals’ determination to block Opposition plans to raise taxes, including the top rate of income tax, to redistribute wealth. Rösler warned that the SPD and Green Party’s plans would serve to increase the fiscal burden by over EUR40bn (USD52bn), noting that the proposals would severely affect average-paid workers, skilled employees, and the country’s middle class.

According to the Federal Finance Ministry, federal tax revenues were up 4.5% in the first quarter of 2013, compared to the same period in 2012, while federal state revenues were up 8.1%. Almost EUR52bn In taxes were collected in March 2013, marking a strong increase.

Cash receipts from wages tax in March 2013 were up by 5.7% over the same month last year. Cash receipts from assessed income tax in March 2013 were up by EUR2.1bn or 26.1% over March last year. Cash receipts from corporation tax amounted to EUR5.3bn, slightly higher than the total for the same month last year (EUR5.2bn). Value-added tax receipts in March 2013 exceeded last year’s level by 5.2%, meaning that they were up for the first time this year following the negative trend in the two preceding months.


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