Germany Looks at Tax Cuts

May 8, 2015 Taxation in Germany

BERLIN – Improved economic conditions in Germany may allow the government to address the problem of tax creep.

On May 7th the Finance Minister of Germany Wolfgang Schaeuble indicated that between 2016 and 2019 the national government will see tax collections exceed previous expectations by approximately EUR 38 billion.

The Minister indicated that the increased revenues will give the government more room to manoeuvre in regards to cutting taxes for individuals.

In particular the Minister indicated that the tax changes will be focussed on addressing the problem of tax creep, whereby incomes are growing faster than the rise of tax threshold, forcing some individuals into higher tax brackets, despite their purchasing power not growing.

It is estimated that addressing the tax creep will cost approximately EUR 1.5 billion per year in lost tax revenues.

According to the Minister the improved tax revenues are a reflection of the improved economic state of Germany now and in the near future.

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