FRiedrich Merz can't help it. The opposition leader is once again trying to stop the government's tax plans through the Federal Council. Next Friday, the Federal Council will discuss the slimmed-down Growth Opportunities Act. Due to pressure from all states with the exception of Bavaria, the associated relief is now only 3.2 billion instead of 7 billion euros. The CDU and CSU have made their approval dependent on the coalition once again correcting a burden on farmers, keyword agricultural diesel. But that is not part of this law at all.
The opposition usually has a say in tax matters through the Federal Council. Countries have a real say when laws affect their finances. Since the federal and state governments share the revenue from large, high-yield taxes, this is usually the case. Exceptions include, for example, the solidarity surcharge and the energy tax, the revenue of which is solely due to the federal government. The majority of states can only delay so-called objection laws, not prevent them. The Bundestag can overrule and thus nullify such a no from the Federal Council.
The Growth Opportunities Act is about regulations on income tax and corporate tax, i.e. community taxes, so that the Union, with its structural majority in the Federal Council, is fundamentally in a strong position. In the mediation committee there was an “inauthentic” result, i.e. no consensus. The members of the government parties pushed through the result against the representatives of the CDU and CSU. However, it is increasingly doubted that their rejection front will hold in the current case if the oath is taken in the Federal Council.
Most recently, Saxony's Prime Minister Michael Kretschmer (CDU) openly stated what until then party friends had only whispered behind closed doors: “The Growth Opportunities Act will get a majority.” When the Saxon said this, the federal government had not yet publicly presented anything that farmers and… so that the Union could be more peaceful. Most recently, speculation revolved around a smoothing of income tax for farmers over several years and a risk compensation reserve for farmers. Both would relieve the burden on farmers and put a strain on federal and state coffers.
Criticism of “decoy offers”
In the summer of 2000, the Union, which was caught in the opposition, also tried to prevent the government's tax plans. The Chancellor at that time was Gerhard Schröder. His finance minister was now Hans Eichel (both SPD), after Oskar Lafontaine had defected a year earlier. In March 1999 he gave up his government office and party chairmanship in one fell swoop. In the Union, Angela Merkel and Merz shared power. One had just been elected CDU leader, the other was still the parliamentary group leader (after the 2002 federal election, he was ousted by his competitor, much to his displeasure).
It was about the red-green tax reform for the years 2001, 2003 and 2005. With the late corrections, the relief added up to 60 billion DM per year; at that time, calculations were still made in German marks. Translated into euros, it was 30.7 billion.
The red-green promise of relief was not enough for the Union. She wanted to achieve more for skilled workers and partnerships. Merz said before the crucial meeting in the Federal Council that he was sure of his cause and the support of the Union-led states. At the same time, he criticized the federal government’s “decoy offers” as dubious. It is expected that Bremen and probably Mecklenburg-Western Pomerania will vote for the reform. Merz rated Berlin, Brandenburg and Rhineland-Palatinate as steadfast.
A surprising number of countries do this
Things turned out differently. The countries being courted gratefully accepted the government's offers. Rhineland-Palatinate, governed by the SPD and FDP, had achieved, under liberal pressure, that the top tax rate was reduced by a further point. This reduced the income tax in three stages to 15 to 42 percent, and from 22.9 to 51 percent. Corporate tax was reduced from 40 to 25 percent, combined with a system change. Until then, the tax burden on dividends had been taken into account (“credited”) when taxing shareholders. Now the burden at the company level became a fact. To compensate, the shareholders only had to pay tax on half of the dividend (half-income method).
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