Tax and Transfer Pricing

German Reduction in Corporation Tax

Peter Altmaier, a member of Chancellor Angela Merkel’s governing conservatives, said he was focused on cutting high German corporate taxes following tax cuts in the United States, Britain and soon France.
Being a conservative like the Chancellor Angela Merkel it’s easy to hold such a view, many experts and political blocs have viewed the state of recent happenings as a catastrophe, as Germany just had a recent economy contraction which last occurred in 2015.

The German politician serving as Federal Minister for Economic Affairs and Energy since March 2018, proposed using half of the increase in tax revenues to fund the tax cuts and said “it was imperative to ensure that contributions for social benefits did not grow beyond forty percent (40%) of a person’s gross salary”.

Altmaier said the contraction was not “a catastrophe” and his ministry called the slowdown a temporary phenomenon that occurred as car companies struggled to adjust to new pollution standards known as WLTP.

Clemens Fuest, head of the Ifo Institute for Economic Research, said the German coalition government had missed opportunities in recent years to strengthen economic growth.
The corporate tax is no higher in Germany compared to other industrialized countries. Finding a solution to the economic contraction in Germany, her citizens or those habiting in Germany must have more money to spend and put into the society which will afloat money in circulation. As Gross domestic product (GDP) in Europe’s biggest economy fell 0.2 percent in the third quarter from the previous three months, it is expedient for the Germans to ensure they are not halting the capacity of the people to spend.

Germany needs a package of tax cuts and other measures to shore up economic growth in the long term, though it’s expected to be a medium term cut[1].

[1] https://www.cnbc.com/2018/11/17/reuters-america-german-minister-looks-to-tax-cuts-as-economy-contracts.html

 

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