💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

German finance minister dampens hopes of tax "bracket creep" reform

Published 17/05/2014, 20:00

BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble has dampened hopes of a reform of Germany's income tax bracket system during the present legislature, saying in a newspaper interview there were no plans to tackle it in 2016.

The Social Democrats coalition partners to Chancellor Angela Merkel's conservatives, have asked to scrap the rule that the brackets are not adjusted for inflation.

A German government spokesman said last month that there was no room in the 2014 or 2015 budget to tackle so-called "cold progression" as the priority was budget consolidation, but that comment raised expectations such a move could come in 2016.

"I know of no such plan, and I haven't discussed such a matter with anyone," Schaeuble, a Christian Democrat, told the Neue Osnabruecker Zeitung in an interview published on Saturday.

Unlike major economies such as the United States, Britain and France, thresholds in Germany's progressive tax system are not automatically adjusted - something the Organisation for Economic Cooperation and Development (OECD) has urged it to address via the introduction of index-linked tax brackets.

The German government surprised with a slightly lower tax revenue estimate for 2014 earlier this month, which Schaeuble said left Germany no financial leeway to cut taxes.

A Finance Ministry spokeswoman said on Saturday in response to a newspaper report that Berlin faced a 4 billion euro shortfall, that the government's plans to reach a balanced budget this year and refrain from any new borrowing in 2015 were on track thanks to fiscal discipline.

Germany's right-left coalition of conservatives and Social Democrats has not yet agreed on how to fill the funding gap. Possible economic sanctions against Russia could have an impact on Germany's tax intake.

Schaeuble told the Neue Osnabruecke Zeitung unexpected external events could always leave the targets vulnerable.

(Reporting by Alexandra Hudson and Thorsten Severin; Editing by Alison Williams)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.