SPD calls for higher taxes on the rich

Germany’s Social Democratic Party (SPD) is calling for higher taxes on the rich in light of a widening income gap between the country’s wealthiest and poorest residents.

SPD calls for higher taxes on the rich
A girl sits at a closed playground in Hamburg. Photo: DPA

Some 26 percent of Germans are poor or in danger of slipping into poverty, according to a report expected on Monday from German Minister of Labour and Social Affairs Olaf Scholz, a Social Democrat.

“We need a new solidarity. This will be impossible without the help of those with the highest wages and the most capital,” SPD MP Karl Lauterbach told the newspaper Neue Presse in its Monday edition.

Lauterbach called for income tax relief for the poorest Germans.

But he said taxes on inheritances and other assets should be increased.

“We must consider placing a larger share of the tax burden on the income that grows the most quickly – and often without a great deal of effort,” Lauterbach told the newspaper.

The SPD is the junior governing partner in a parliamentary grand coalition with Chancellor Angela Merkel’s conservative Christian Democrats.

Fritz Kuhn, chairman of the opposition Green Party, said the governing coalition has failed to take action.

The coalition must “quit with the lamenting and finally take action,” Kuhn told the newspaper Berliner Zeitung on Monday.

Klaus Ernst, a chief of the hard-line socialist party The Left, said the poverty report to be presented on Monday documents the failure of the SPD.

“While they have been in power the number of millionaires has doubled while poverty has increased significantly,” Ernst told the Berliner Zeitung.


EU ministers urge unity after Germany’s energy ‘bazooka’

EU finance ministers on Monday pleaded for unity after Germany announced a €200 billion plan to help German households and businesses pay for high energy prices, amid accusations that the EU's biggest economy was acting alone.

EU ministers urge unity after Germany's energy 'bazooka'

Europe is struggling with historically high energy prices as it faces an early autumn cold snap and a coming winter almost certainly to be endured without crucial Russian gas supplies because of the war in Ukraine.

Many EU countries have announced national programmes to shield consumers from the high prices. But Germany went the furthest on Friday when it announced its mammoth plan, which will see help pouring to Germans for two years.

Arriving to talk with his eurozone counterparts, German Finance Minister Christian Lindner insisted the spending was “proportionate” to the size of Germany’s economy and said his goal was to use as little of the money as possible.

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

But Germany’s largesse rankled several EU capitals, some of which feared their industries could take severe blows while Germany’s sits protected, deforming the EU’s single market.

Outgoing Italian prime minister Mario Draghi has slammed Berlin for its lack of solidarity and coordination with EU partners.

French Finance Minister Bruno Le Maire, without directly criticizing Berlin, called on partners to agree a common strategy against the price shock and for countries to refrain from going it alone.

“The more this strategy is coordinated, united, the better it is for all of us,” he said.

Risk to ‘European unity’

Others pointed to the unprecedented solidarity shown in the Covid-19 crisis in which the 27 EU nations, against all expectations, approved a jointly financed €750 billion recovery plan.

“Solidarity is not only on the German shoulders, I think this is something that we have to deliver at European level,” said EU economics affairs commissioner Paolo Gentiloni.

“We have very good examples from the previous crisis on how solidarity can react to a crisis and also reassure financial markets. I think that this is our goal,” he said.

While a Covid-style recovery plan is not in the cards for now, Le Maire said €200 billion in loans and €20 billion in aid should be devoted to REPowerEU, a programme to help countries break their dependence on Russian gas.

READ ALSO: Will Germany set a gas price cap – and how would it work?

Bruegel, a highly influential think tank in Brussels, called the German plan a spending “bazooka” that many EU countries were unable to match, creating a potential source of animosity.

“If the German gas price brake gives German business a much better chance to survive the crisis than, say, Italian business, economic divergences in the EU could be deepened, and European unity on Russia undermined,” it said in a blog.