Framework for German Tax Cuts Reached

October 21, 2009 Taxation in Germany  No comments

Negotiations between the proposed coalition of Germany’s Christian Social Union (CSU), Christian Democratic Union (CDU) and Free Democratic Party (FDP) have reached a framework for future tax cuts.

Following a weekend of negotiations, statements were made on Monday the 19th of October, releasing some indications of Germany’s future tax direction. Much detail concerning the agreements reached and projections created during the negotiations has been kept secret, but clear indication has been made that all involved parties are dedicated to providing tax cuts and attempting to revive Germany’s struggling economy.

Horst Seehofer, Head of the CSU, in an October 19th press conference, said “We will certainly see tax relief in 2011,” without elaborating on the exact scope of the cuts, he simply stated “There will be a cut in income tax”. Comments to press made during the weekend-long negotiations indicated tax cuts will total approximately €20 billion, which is already €5 billion more than promised by the CDU throughout its election campaign, though €15 billion less than hoped for by the FDP. According to the CDU, tax cuts exceeding €20 billion would require corresponding reductions in government spending.

According to Georg Fahrenschon, negotiating member of the CSU, Germany will see corporate tax cuts and inheritance levy reductions totaling €14 billion by the end of 2010. He also indicated that tax relief scheduled for 2011 will be primarily focused at low and middle income earners.

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