Germany’s “grand coalition” agrees across-the-board income tax cuts Germany’s “grand coalition” agrees across-the-board income tax cuts

Germany’s “grand coalition” agrees across-the-board income tax cuts
12 Feb 2018

A newly-struck deal between Germany’s Christian Democrats and Social Democrats will leave earners across the pay spectrum better off.

According to the Frankfurter Allgemeine Zeitung (FAZ) a single person earning €40,000 (US $49,000) a year would pay €600 (US$736) less in tax by 2021. A family with two children and one earner on €40,000 (US$49,000) a year, would benefit to the tune of €860 (US $1,050).

People who are unmarried and have no children will also gain from the new coalition’s agreement to phase out the solidarity tax, which was introduced in the 1990s to pay for reunification. But the situation will not apply to those earning more than €54,000 (US$66,000), who will continue to pay the solidarity surcharge.

On the other hand, families, who are already exempt from paying the solidarity tax, will receive more child support as payments are set to go up by €25 (US$31) per month.

The agreement still needs to be approved by the Social Democrats’ 460,000 members in a postal vote, the results of which will be announced on 4 March.

The complex talks between Chancellor Angela Merkel’s centre-right Christian Democrats (CDU), their allies the Christian Social Union (CSU) and the centre-left Social Democrats (SPD) followed elections in September that resulted in no overall majority for any single party.

Research by the OECD last year revealed that Germany has the second-highest tax burden in the world, after Belgium.

Gill Oliver

Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.

A newly-struck deal between Germany’s Christian Democrats and Social Democrats will leave earners across the pay spectrum better off.

According to the Frankfurter Allgemeine Zeitung (FAZ) a single person earning €40,000 (US $49,000) a year would pay €600 (US$736) less in tax by 2021. A family with two children and one earner on €40,000 (US$49,000) a year, would benefit to the tune of €860 (US $1,050).

People who are unmarried and have no children will also gain from the new coalition’s agreement to phase out the solidarity tax, which was introduced in the 1990s to pay for reunification. But the situation will not apply to those earning more than €54,000 (US$66,000), who will continue to pay the solidarity surcharge.

On the other hand, families, who are already exempt from paying the solidarity tax, will receive more child support as payments are set to go up by €25 (US$31) per month.

The agreement still needs to be approved by the Social Democrats’ 460,000 members in a postal vote, the results of which will be announced on 4 March.

The complex talks between Chancellor Angela Merkel’s centre-right Christian Democrats (CDU), their allies the Christian Social Union (CSU) and the centre-left Social Democrats (SPD) followed elections in September that resulted in no overall majority for any single party.

Research by the OECD last year revealed that Germany has the second-highest tax burden in the world, after Belgium.

Gill Oliver

Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.

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