On September 26, 2021, a new Bundestag will be elected in Germany. In order to generate government revenue and fill gaps in the treasury, which have been widened not least by the Corona pandemic, tax policy has a key role to play. The problem could be that, due to the sharp increase in debt, there is an overemphasis on fiscal policy motivated by budgetary considerations.

The election programs of the parties are an indicator of the directions in which the respective parties want to go with their tax policy. The SPD (social democratic party of Germany) and Die Linke (democratic socialist party) focus on higher taxation of high incomes and lower taxation of low incomes. Bündnis 90/Die Grünen (green political party) are also more on the side of the SPD and Die Linke in terms of tax policy. They are also calling for the introduction of a wealth tax. The FDP (free democratic party, a liberal political party) represents the antithesis to these tax programs and calls for greater relief for companies and citizens, as well as market-based mechanisms in the area of climate protection. Tax reduction proposals also come from the ranks of the CDU (Christian democratic union) and CSU (Christian social union). The CDU/CSU and the Liberals (PDF) agree on a maximum tax burden of 25 % for companies and reject a wealth tax.

Excerpt of the tax policy content of the election programs of the individual parties*:

*EY Tax & Law 2/21 p. 16.

Regardless of the outcome of the elections and the coalition formed, it is to be expected that climate policy tax measures will be implemented. Conceivable are the CO₂-Steuer respectively the increase in CO₂-Price to achieve the climate policy goals. Tax changes in sales taxation are also possible. In the area of income tax, lower incomes could be taxed less than before, while higher incomes could be taxed more heavily. The abolition of the solidarity surcharge without replacement and changes of wealth and inheritance tax are considered unlikely.

Due to the high corporate tax burden in Germany by international standards, the Federation of German Industries is calling for a reduction in the effective tax burden from the current level of around 31 % to 25 %. This would put Germany in the middle of the field in an international comparison of the major industrialized nations. A tax cut would have positive effects on the liquidity and investment strength of companies and would safeguard jobs. Germany would also still be above the emerging global minimum tax of 15 %. It is questionable whether such a reduction in the effective tax burden is possible (and desirable) given the current high level of debt. At least the CDU/CSU and FDP have perceived the desire for a tax cut. This could provide economic incentives and thus also have a positive impact on tax revenues.

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We have collected the information available on our Corona news portal which includes a constantly updated overview regarding the measures to tackle financial impacts of the Corona crisis.