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Germany's CSU Eyes Middle Class Tax Cuts

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

In the run up to German elections, the Christian Social Union (CSU) has underlined the need to introduce tax relief for hard-working employees in Germany and to allow the federal states greater fiscal autonomy in the future, to foster tax competition.

In an interview with Focus, Bavaria's Finance Minister Markus Söder (CSU) emphasized the importance of alleviating the effects of fiscal drift in the income tax system, to provide moderate tax relief to employees and to ensure that workers have more net income at the end of the month.

Söder also advocated that wage and income tax be regionalized, to allow individual federal states to determine their own surcharges and tax deductions. Such a measure would enable the CSU to reduce the tax burden on the country’s middle class by a total of almost EUR3bn (USD3.9bn), Söder explained, noting that as a result an employee with an annual gross income of EUR50,000 would be EUR300 a year better off.

The Bavarian Finance Minister questioned why Germany's main Opposition parties, the Social Democrats and the Green Party, still insist on raising taxes and introducing wealth taxes in Germany at a time of high revenue levels. Wealth taxes merely increase the fiscal burden on middle-income earners, harm the economy, and endanger jobs, Söder warned.

While declaring that he is open to the idea of a reforming the voluntary declaration provision in Germany's criminal tax law, Söder underscored the importance of maintaining, although toughening, the instrument in major cases of tax evasion, such as capital market abuse and money laundering. The provision must be tightened and made more precise, Söder made clear.


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