The elimination of the solidarity tax was paid since 1991 to the citizens of the west to defray the costs of reunification. It is expected that from 2021 this tax will cease to be paid
The German Government decided on Wednesday the elimination of the solidarity tax, a contribution that came into force following the fall of the Wall with the idea of defraying the high costs of Reunification.
The tax so far accounts for 5.5% of income tax and corporate tax. For the State, this means dispensing with 18.9 billion euros annually per year, in accordance with the budgets of the last three years.
The sum of money raised by the German State was not specified in improvements in the infrastructure or public schools of the states of the former East German, but the sum was going to directly fatten the federal budget. This lack of clear destination had made this tax increasingly unpopular, especially in the western states of Germany, and its elimination was part of the electoral programs of large parties.
The project approved on Wednesday in the Council of Ministers provides that as of 2021, 90% of taxpayers will stop paying this tax. However, for the sections with the highest purchasing power, it will continue to be valid: for 6.5 percent, the burden will be partially reduced, while 3.5% of people with more income will continue to pay it in full.
“Today is a significant day on the road to the culmination of reunification,” said Finance Minister Social Democrat Olaf Scholz, a great promoter of this measure. For their part, critics of this measure doubt its legality and trust that the German Constitutional Court will rule in favor of maintaining the contribution. In the opinion of the holder of the Finance portfolio, the reunification costs have already been paid “in large part”. The rest will be provided by “those who have more than others”, something that is “fair,” he said.
Scholz, who recently showed himself willing to lead the German Social Democratic Parties (SPD), headlined since the resignation of its former president Andrea Nahles, has gained prominence in recent days for opening the door to an injection of some 50,000 million public money into the German economy as a recipe in the face of the impending recession facing the country.
The German government of coalition between conservatives and social democrats frames this measure within its “general strategy for fiscal and budgetary policies that promote social justice and growth.”
