German Chancellor Rules Out Tax Rises
02 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
German Chancellor Angela Merkel has recently made clear that the black-yellow coalition has no intention of either raising taxes or "inventing" new ones.
Addressing family business leaders in Berlin, the German Chancellor underlined the importance of creating a climate of certainty for investors to ensure growth. Chancellor Merkel insisted that the coalition would not introduce a tax on wealth, in any form. There will be "absolutely no wealth tax with me," Merkel stressed, pointing out that such taxes always affect the wrong people. Any increase in the tax burden would be completely wrong given the current uncertainties, Merkel warned.
While highlighting the fact that there is no scope to introduce significant tax cuts in Germany at the current time, Chancellor Merkel nevertheless underlined her continued commitment to further alleviating the effects of fiscal drift in the country's income tax system, beyond the rise in the basic tax-free allowance already implemented.
Referring to fiscal drift as "an element of injustice,” the German Chancellor maintained that it is simply not right that those employees who have contributed to overcoming the financial crisis are now not able to benefit in full from a wage rise. The coalition does not want additional revenues to flow to the state that actually belong to workers, Merkel explained. Merkel emphasized that it was Social Democrat-led states that blocked plans at the beginning of the year to increase tax bands by a total of 4.4%, to counter the problem.
Merkel defended the Government's successful tax policy, in particular the Government’s decision to lower the administrative burden on individuals by 25%, by simplifying reporting duties. This cut the tax burden on citizens by around EUR12bn (USD15.8bn), the Chancellor remarked. Merkel also noted that the coalition has simplified inheritance tax and made improvements to corporation tax.