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Coalition agrees to tax cuts in 2013

The Local · 4 Jul 2011, 09:14

Published: 04 Jul 2011 09:14 GMT+02:00

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The tax cuts reportedly will target low and middle income earners and take effect by the 2013 elections – possibly in time to help help boost the fortunes of the government's troubled junior coalition partner, the pro-business Free Democrats (FDP).

“We now have a timeframe but we will probably set the size in autumn,” FDP General Secretary Christian Lindner told public broadcaster ARD on Monday. “We have to see how tax revenues develop before we can determine the amount we have…to lower the tax burden.”

Any cuts could still run into stiff opposition as many German politicians – on both the right and the left – have expressed deep reservations about cutting taxes.

The final proposal is circulating among leading politicians and is set to be officially approved by Chancellor Angela Merkel’s cabinet on Wednesday at the same time that a government budget for next year will be discussed.

It immediately came under criticism by the centre-left Social Democratic Party (SPD). SPD parliamentarian Joachim Poß joked that Merkel and her allies were trying to play “Santa Claus” right before the summer break.

The decision comes as Germany’s economy is booming, creating some breathing room to cut taxes.

According to the proposal, the cuts will ensure “all citizens can participate in the upswing” and create “more financial freedom” for citizens.

The FDP sees this as essential to maintaining Germany’s economic recovery by increasing consumption and investment by regular people.

The announcement comes as somewhat of a surprise because it appeared the governing coalition would never agree on the issue.

Though the FDP has long been pushing for major tax cuts, leading members of Merkel's conservative Christian Democrats (CDU) seemed reluctant to agree.

Story continues below…

For example, Finance Minister Wolfgang Schäuble emphasized last month that "we don't have a lot of leeway in the budget for tax cuts."

DAPD/DPA/The Local/mdm

The Local (news@thelocal.de)

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Your comments about this article

10:34 July 4, 2011 by The-ex-pat
So in a nut shell, expect three fifths of bugger all several years down the road........
11:03 July 4, 2011 by Johnne
Before you know it, 2013 is just some months away. These tax cuts are highly needed in this country. As a small business owner, my greatest problem is the high volume of I cough out every month/year. Small entreprenuers are apealing to the government! Please help us! Thanks you!
11:13 July 4, 2011 by Englishted
To many people earn to little to pay tax ,that is the problem.

400 euro jobs don't pay tax or anything towards their pensions yet 25% (from the local report) of Germans who work do one many as their only job.

This combined with job agencies are killing the job market.
12:26 July 4, 2011 by auniquecorn
you guys are missing the big picture,

it´s only going to be a 0,2% tax cut in 2013.

What your not seeing is the 4,9% tax increase in 2012.
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