Cabinet approves scholz’s soli plan

cabinet approves scholz's soli plan

According to the taxpayers’ association, many normal wage earners will still have to pay the tax even after the planned extensive abolition of the soli.

"Minister scholz is concealing the fact that with his draft, savers will continue to pay the solidarity surcharge," the president of the taxpayers’ association, reiner holznagel, told the deutsche presse agency.

For most people in germany, the solidarity surcharge is to be abolished as of 2021. For 90 percent of today’s payers, the tax is to be cancelled, as the federal cabinet decided. A further 6.5 percent are to pay it only partially from 2021 onwards – the higher the income, the more. "The few costs remaining after the solidarity pact expires at the end of the year will be shouldered in the future by those who have more than others," finance minister olaf scholz (SPD) said in a statement.

Holznagel criticized that small and medium-sized, family-run companies would continue to be affected. "It’s not always the millionaire nobody loves who can actually pay for everything."Mario ohoven, the president of the german SME association, called the cabinet’s decision an "attack on our constitution and the economy". Craft trades president hans peter wollseifer spoke of an "anti-performance signal to all successfully operating craft trades".

Background to the criticism: scholz’s draft provides for shortcuts to the soli only in the case of income tax. The tax is also levied on the corporate income tax paid by companies and on taxes on capital income, such as those on savings contracts or shareholdings. The soli, which is estimated at 5.5 percent, was once introduced partly because of the iraq war and later because of the construction of the new federal states. In total, the soli brought in 18.9 billion euros for the state last year. If scholz has his way, the decision on its complete abolition will not be made until the next legislative period, as he said on ARD television.

The union wanted to eliminate the soli altogether in the long run. "It is an important step that the soli reduction is initiated. But it’s still not enough," said bavarian minister-president markus soder (CSU) in nurnberg. "The soli must be completely dismantled in a second step. It’s a question of fairness and credibility."Saarland’s minister president tobias hans (CDU) demanded a binding timetable for complete abolition.

The SPD, however, attaches conditions to further steps. "A complete abolition of the soli is and remains conceivable for the SPD only if it is combined with an increase in taxes on the rich and income for top earners," said SPD deputy faction leader achim post. The complete abolition would be a "relief program worth billions for top earners" and "highly unjust".

The FDP again demanded the complete abolition of the soli. Regarding his further elevation, party leader christian lindner said: "this is legally questionable, it is economically unwise and it is politically unbelievable." His party wants to sue against the levy. Grunen leader annalena baerbock proposed a reduction in income tax for low-income earners and a heavier burden on top earners as an alternative to the soli. The bundestag has to approve the reform, the bundesrat does not.

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