German Budget

Show Me the Tax Money

  • Why it matters

    Why it matters

    Introducing tax reform and relief in Germany would be a great asset during election campaigning, the author argues, and could prove a valuable negotiating tool when it comes to the formation of coalitions after the September vote.

  • Facts

    Facts

    • Germany’s finance minister has already offered voters tax relief of around €15 billion ($16.2 billion). He probably has double the room.
    • According to an OECD study, Germans have a greater tax and social security burden than every other of the 35 countries in the group except for Belgium.
    • In 2016, the government reported a surplus of €6.2 billion. However in 2018, Germany reportedly has a looming budget shortfall of €8.3 billion.
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    Audio

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Berufspendler auf dem Weg zur Arbeit
Hard working: It is about time for some tax relief for the German middle class. Source: DPA [M]

This year will be the third straight time that German Finance Minister Wolfgang Schäuble has presented a balanced budget. As a result, he will go down in the history books as one of the Germany’s most successful finance ministers. And in contrast to many of his predecessors, Mr. Schäuble has managed to ward off the largest fiscal favors requested by his fellow cabinet members.

But now it really is time to give the taxpayers back some of their hard-earned cash. Ever the smart saver, Mr. Schäuble realizes this and is holding out to taxpayers the prospect of €15 billion ($16.2 billion) in tax relief. But when such a penny-pinching calculator like our finance minister is willing to pay out €15 billion, then there’s definitely more in the coffers, and perhaps twice as much spare. You don’t have to be the party chairman of the Free Democrats to have reached that conclusion.

Fiscal policymakers know that any truly sensible income tax reform must involve at least 1 percent of a country’s gross domestic product. So that would be about €30 billion. That kind of money could stimulate the economy. But above all, it would realign the balance between the state and the private sector.

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