In view of a record federal surplus, the debate about possible tax cuts is gaining momentum. Federal economics minister peter altmaier (CDU) wants to cut corporate taxes again, while SPD leader norbert walter-borjans wants to ease the burden on small and medium incomes.
"We need to improve the framework conditions for companies so that they can remain competitive internationally," altmaier told the german press agency. "Our companies need more air to breathe so that they can make the crucial investments in the technologies of the future. This includes tax relief and reduction of bureaucracy."Altmaier has long called for lower corporate taxes and a complete abolition of the solidarity surcharge – but the SPD is against it.
Walter-borjans told the "suddeutsche zeitung" (friday): "we have to decide: do we want small and medium incomes to be allowed to keep more of their wages in the end? I think so."The german federation of trade unions (dgb) also called for a tax cut for small and medium incomes. The money freed up in this way would flow directly into consumption and thus strengthen the domestic economy, board member stefan korzell told the "neue osnabrucker zeitung" (friday).
Supported by low interest rates, the federal government achieved a record surplus of 13.5 billion euros last year despite the weak economy. The left, FDP and afd then demanded that this be used to reduce taxes.
SPD co-chairwoman saskia esken, on the other hand, had rejected calls for tax cuts about a week and a half ago. "I really think it’s a dangerous proposal to cut taxes now," she told bayerischer rundfunk radio. Instead, she called for a "long-term investment plan" so that investments could be made regardless of the cash situation and the economic situation.
Top business associations have long been calling for tax cuts – also pointing out that in countries like the USA taxes have been lowered. It is a matter of maintaining the competitiveness of german companies. Altmaier had already presented proposals. These proposals include lowering the corporate income tax rate.
Earlier this week, the tax debate was further fueled when it became known that more than 3.5 million people had to pay the top tax rate in 2015 – with a strong upward trend. Many employees with medium salaries have already been declared top earners, criticized dietmar bartsch, head of the left-wing parliamentary group.
Walter-borjans now emphasized that the decisive factor is not the taxation of the last euro earned, but the percentage of the total income that goes to the tax office. This average tax rate is between 15 and 25 percent for most people. "We should still lower it spuriously."
In an interview with the business newspaper "handelsblatt," he had previously referred to proposals put forward by the SPD before the last federal election: "the top tax rate should only apply to higher incomes than today, but the rate should rise above that."On the other hand, he said of the calls for a reform of the corporate tax: "I won’t do anything about that. Just because the federal government has surpluses or someone fears that the economy could weaken a little, we must not allow ourselves to be carried away at this point."
According to the "SZ" report, walter-borjans expects tax relief for small and medium incomes to reduce government revenues by at least 30 billion euros. "Then the decision is: do we want to do without good schools, intact roads, bus and rail connections, hospitals and finally stable mobile communications?? Or on investments in humanitat and social cohesion? I think no!"
But then there is only one way out: "close tax loopholes, give top incomes and assets a greater share in the financing of the public sector, and finance part of the investments in the future through loans. Just as successful companies do."
FDP parliamentary group vice-chairman christian durr said on friday: "an increasingly large majority of people in germany want to see taxes cut. The state takes in huge amounts of money every year, but the taxpayers never get anything back."
Ex-union faction leader friedrich merz spoke out in favor of "giving something back to burghers and companies. "I think the union would be willing to tackle appropriate reforms," he told the "saarbrucker zeitung" (friday).