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Schaeuble sees room for more German tax cuts
July 02, 2017
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BERLIN: German Finance Minister Wolfgang Schaeuble said in a radio interview to be broadcast on Sunday that there could be room to cut taxes by more than the 15 billion euros already announced after the Sept. 24 election.

Schaeuble told Deutschlandfunk radio that he hoped there could be tax relief beyond that already promised 15-billion euro income tax cut. The conservative Christian Democrats will present details on that with their campaign platform on Monday.

“We’re planning, all in all, to do more than just correcting the income taxes by 15 billion euros,” he said, referring to plans to reduce the country’s “cold progression” tax increases − or “clandestine tax increases. Germany does not adjust tax brackets for inflation, unlikely many other countries.

Schaeuble said that aside from fighting “cold progression”, the Christian Democrats want to support young families to build new housing while also supporting research and development for small- to medium-sized companies.

He said he would like to start dismantling the so-called “Solidarity Tax” in 2020 that was introduced after German unification to help pay for the costs of rebuilding infrastructure in formerly Communist East Germany.

Schaeuble has rejected criticism that the income tax cuts of 15 billion years a year were too low to significantly boost economic growth through consumption.

Economists and business lobby groups inside and outside Germany have demanded an overhaul of Germany’s tax system, namely steeper tax relief that would boost consumption and growth and a lower corporate tax rate that would encourage private investments.

The International Monetary Fund and European Commission have said that Germany has room to lift investments on hard and digital infrastructure, which would help reduce its current account deficit and benefit weaker eurozone peers.

Germany invested about 2.2 of output on roads, bridges schools and kindergarten each year on average between 2005 and 2014, significantly lower than the average of 3.3 per cent among members of the Organisation for Economic Co-operation and Development (OECD).


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