Workers in Germany pay record tax sum

Workers in Germany are paying a record amount of tax into government coffers, according to figures published on Monday. Those on an average wage of €40,000 pay almost twice as much tax in Germany as they would in the United States or Australia.

Workers in Germany pay record tax sum
Photo: DPA

Tax revenue in Germany spiked by 6.4 percent in June this year compared to 2013 to €63.5 billion, according to a finance ministry report released on Monday.  

An increase in income tax is one of the core reasons for the boost, said the finance ministry, citing that German unemployment has remained low despite political unrest – namely in countries such as Ukraine and Iraq – that has weighed on the export-oriented economy.

In the first six months of 2014, tax revenue increased by 2.5 percent to a record €284.5 billion. The highest increase came from motor vehicle tax, with a revenue increase of 70.3 percent.

Tobacco and energy tax revenues also spiked on the year, at 25.1 and 6.6 percent respectively.

Germany has one of the highest tax rates in Europe.

A single person earning an average wage of €40,000 a year can expect to have a total of €15,586 euros (38.9 percent) deducted from their pay slip each year in income tax and social security payments, including for health and pension contributions.

That is almost twice the rate of the USA and Australia and higher than its European neighbours, including France, the UK and Denmark.

But despite the large tax burden, tax cuts are unlikely. The Finance Ministry plans to balance its books in 2015, meaning no new government debt would be taken on for the first time since 1969.

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