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Europe
German finance minister urges fairer tax competition within EU
2005-12-31
Posted on the off-chance Europe still matters.
German finance minister Peer Steinbruck has urged new EU member states to raise their taxes and ensure "fair tax competition" among the 25 members of the bloc.
Oh. For a moment there I thought Peer was announcing that Germany was going to allow its economy to become competitive by reducing the tax burden on its businesses and citizens. I shoulda known better. Sigh. What a shame. We actually *do* need a Europe. Too bad we don't have one anymore.
Tax cuts in many of the new EU member countries have "nothing to do with fair tax competition and place a burden on German jobs", the minister said in an interview with German daily Die Welt. The problem must be seriously discussed and a solution found, he added. The German minister said the tax cuts in some EU countries were partly financed by Berlin’s contribution to the EU's coffers.

EU heads of state and governments agreed earlier this month on how to finance the EU from 2007-2013. Germany will continue to contribute large amounts to the common coffers, from which the eastern EU member states benefit. "It cannot be, that some countries demand more funds from the EU budget while on the other hand failing to improve their own tax basis", Mr Steinbruck said.

The combined corporate tax rate in Germany is almost 40 percent, while it is much lower in a number of countries. Slovakia has imposed a 19 percent flat tax in order to attract business and create more jobs.
Lower taxes = more prosperity. No wonder the EU doesn't get it.
Germany’s new coalition government had planned to raise VAT to 19 percent in 2007 in a bid to narrow the country’s budget deficit which is exceeding the levels set by euro zone criteria. The coalition of Social Democrats and Christian Democrats have also agreed, that EU member states competing on lower taxes should have their funds from EU regional funds cut.

But German industry did not back the minister in his crusade to ensure what he considers fair tax competition in the EU. Tax expert Klaus Braunig from the Federation of German Industries (BDI) said the government would do better by ensuring that German tax rates are internationally competitive. "There is no guarantee that business will stay in Germany or move in, if other EU countries were forced to raise their tax levels", he noted.
Posted by:Steve White

#7  Leon, you keep on trying to inject the EU Constitution in threads that have little to nothing to do with it.
Posted by: Aris Katsaris   2005-12-31 16:46  

#6  If only, if only. Aw well. There will be another round for the EU Constitution. Perhaps this time it won't be left up to Gallic whims.
Posted by: Leon Clavin   2005-12-31 16:04  

#5  Must have caught a case of that STD "taxing ourselves to prosperity" from the US Democrat party. That is a deadly disease. I hope it doesn't spread to the new EU members.
Posted by: Mahou Sensei Negi-bozu   2005-12-31 15:04  

#4  "It cannot be, that some countries demand more funds from the EU budget while on the other hand failing to improve their own tax basis", Mr Steinbruck said.

Very cleverly worded, but also quite disingenuous because I'm sure Mr. Steinbruck is aware that average incomes in the new EU member states are, what, twenty times lower than in Germany. With a Euro manager making 300,000 euros/year, only someone at the very top of the corporate heirarchy can match that sort of salary in a country such as Poland, for example.

If you raise taxes for workers and small businesses, you will drive these countries into recession, or even worse. Poland is already on the brink (though the latest figures are optimistic).

This is a classic "oh shit" moment on the part of the Germans. They've let these countries in to their club, with hopes of new markets opening up, and for the most part, that's exactly what happened. But now they've discovered that some things can be produced more cheaply just across the border, and with the same quality. Some things are even better, an example being Polish meat that is now streaming into Germany (and bread, dairy products, etc produced by the highly inefficient Polish farmer...efficiency be damned! It just tastes better and the market reflects this).

So what to do, what to do. Well, demand that these new miscreants raise their taxes!! To prevent dear old Porsche from even thinking about opening that new plant in Bratislava.

While the new member states do get a net payment from the EU budget, paid for by rich members like Germany, it is precisely because these new members are playing catch-up to the rest of western Europe. When they do catch-up to the Euro manager's 300,000/year salary, I imagine these net payments will cease. So stop complaining, Mr. Steinbruck! You got what you wanted.
Posted by: Rafael   2005-12-31 03:05  

#3  It's true that money and I have never gotten on, but it does seem fair to me that countries with such low tax structures that they aren't actually self-supporting should not be given large handouts from EU coffers. On the other hand, in my ignorance it seems to me that countries with high tax structures coupled with even higher payouts should also not receive large handouts from EU coffers, in order to encourage consequential behaviour. Perhaps then France will stop supporting its farmers, Beurs, and the healthy unemployed in a style to which I would be very pleased to become accustomed (except for gang raping modernly dressed girls -- I don't think I would be very good at that bit); and perhaps then the Germans would not consider the proper age for going to university to be the entire period between 19 and 35 years of age, with 50 or so being the proper age at which to retire.
Posted by: trailing wife   2005-12-31 01:45  

#2  "Jawohl, ve vish to force our economy deeper into ze toilet.

"Ve vish to excel at zomezing, even it's simply driving our economy into ze grund!"
Posted by: Barbara Skolaut   2005-12-31 01:27  

#1  Never trust any statement containing the word 'fair'.
Posted by: phil_b   2005-12-31 00:56  

00:01