Media reports on Wednesday said Schäuble's proposals to let people file tax returns every two years, and allow city and local governments to set part of the income tax rates, have both met with sharp opposition from the states.
State governments oppose his plan to allow taxpayer to submit tax returns only every two years instead of each year, the Berliner Zeitung reported.
During talks last week with Schäuble, representatives of the 16 states unanimously rejected the plan, the paper reported. The states complained that the plan would not actually simplify income tax – either for employees or for tax administrators.
Indeed for tax officers around the country it would mean more work, they said. During the meeting it became apparent, according to participants, that Schäuble wasn't actually planning for a single tax return for each two years to be made possible.
Rather it is expected that people would be given an extension of 12 months to file each return, in the hope that they would get into a two-year rhythm in filing.
The states pointed out that very few people would likely adopt the two-year cycle, since about 18 million of Germany's 20 million income taxpayers got money back from the Finance Ministry. They would not want to wait two years anyway.
Opposition is also growing to Schäuble's plan to allow city and local governments to set part of the income tax rate for people living in their municipalities. Lower Saxony Finance Minister Jörg Bode accused Schäuble of totally ignoring the authorities that would be responsible for such a system.
In a letter to Schäuble, seen by the daily Hamburger Abendblatt, Bode wrote: “I think it's obvious that such serious considerations to changes to community financing should be discussed in the community finance commission (a commission set up by the Finance Ministry to look at reforming local government finances.)”
He added: “Representatives of the constitutional bodies have just been appointed to (the commission), who you have completely ignored in your approach.”
Schäuble was already come under pressure this week following the resignation of his spokesman Michael Offer after an embarrassing public reprimand by his boss last week during a press conference mix-up.