Germany Sees Record Budget Surplus


By Global Tax Weekly

The German Government deserves much credit for the prudent management of its budget, and of its economic affairs in general, which has resulted in a record post-reunification budget surplus of EUR24bn (USD25.3bn). But I could also mark the country down for its extreme reluctance to share the surplus in the form of tax cuts. And there’s plenty of scope for those. According to Paying Taxes, an average-size company in Germany hands over just under 50 percent of its profits in income, labor, and other taxes. What’s more, individuals face a top rate of 45 percent, plus the solidarity surcharge and social contributions. The counter argument is that some of the best public services in the world must be paid for somehow, and that somehow is inevitably through taxation – a bargain accepted in northern Europe much more than it is anywhere else in the world. But there is of course another reason why “Mutti” Merkel is keeping such a tight grip on the purse strings. And that is Germany’s role as the Eurozone’s fiscal firefighter. Yes, we might not hear about the crisis in Greece, and the problems afflicting Italy, Spain, and Portugal so much anymore, but the fire is still smoldering below the surface, and many believe it could erupt again at any moment. There is an election coming up though. So we can expected the usual promises of minor tax relief, to be delivered through tweaking tax allowances and thresholds, but not much more than that I suspect.


For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look





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