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German government to cut income taxes from 2013
Oct 20, 2011, 10:48 GMT
Berlin - Germany is to slash income taxes from 2013, Finance Minister Wolfgang Schaeuble said Thursday in Berlin.
The move will reduce overall government revenue by up to 7 billion euros (10 billion dollars) annually.
But Schaueble gave no immediate details of the cuts, which will cut the revenues of the federal government, the states and local authorities.
The government would eliminate that part of tax progression which is caused by inflation. Schaeuble said it had been an 'unintended' effect of the existing tax system that people had to pay higher income taxes whenever they received inflation-related pay rises.
'We want to permanently eliminate this covert mechanism,' he said.
But he said Germany would not be adopting tax indexation, a method that automatically reduces taxes in step with inflation.
'If you do that there's nothing to hold on to anymore,' he said.
'We will make discretionary decisions over time to fight it,' he said.
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