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Coalition set to cut taxes by €4.5 billion

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Coalition set to cut taxes by €4.5 billion
Photo: DPA
11:09 CET+01:00
Tax relief of €4.5 billion could be coming the way of German companies and workers, mostly by slashing red tape, the pro-business Free Democrats (FDP) announced Thursday.

Leaders of Chancellor Angela Merkel's centre-right coalition will meet on Thursday to consider a proposal to simplify the tax code in order to free up more than €4.5 billion, the FDP’s general secretary, Christian Lindner, told broadcaster Deutschlandfunk.

The main beneficiaries will be companies, whose bureaucratic costs would be slashed by a waiving of a range of complex regulations and written documentation.

However, tax relief for employees running to €590 million would also be on the table, Lindner said. Among other changes, the amount that employees could claim as expenses before they have to itemise amounts with supporting documents such as receipts would be raised from €920 to €1,000, with the aim of dramatically reducing the amount of paperwork for taxpayers.

As well as cutting the administrative costs for tax authorities themselves, it will also knock down the tax burden for workers.

For business, at least, the reforms would be considerably more generous than has been expected.

Lindner said this was just a first step towards larger tax relief for workers. He told the Thursday editions of the WAZ group of newspapers that “more than 30 items for a tax simplification are on the table – significantly more than Finance Minister Wolfgang Schäuble had originally planned.”

When the coalition leadership committee meets on Thursday, it will also discuss Germany’s looming skills shortage. Lindner told Deutschlandfunk that home-grown labour alone could not fill the shortage and recruiting talent from overseas would have to be discussed – a sensitive topic with coalition partners the conservative Christian Social Union, which has taken a tough stance against immigration.

One could not “train every unemployed person into a highly qualified engineer,” he said.

DAPD/The Local/dw

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