Merkel’s conservatives want stimulus package to include tax relief: document

FILE PHOTO: German Chancellor Angela Merkel addresses a news conference following a meeting with international economic and financial organisations at the Chancellery in Berlin, Germany May 20, 2020, on the effects of the novel coronavirus COVID-19 pandemic. Odd Andersen/Pool via REUTERS

BERLIN (Reuters) – Chancellor Angela Merkel’s conservatives are in favour of bringing forward tax relief measures worth at least 5 billion euros to help companies and consumers recover more quickly from the coronavirus pandemic, a document showed on Monday.

Merkel’s coalition government, which in March approved an unprecedented 750 billion-euro rescue package to shield Europe’s largest economy from the impact of the coronavirus, is due next week to present additional stimulus to sustain the recovery.

In a position paper seen by Reuters, lawmakers from Merkel’s conservative bloc called on several measures to reduce the tax burden for the private sector, including making it simpler to offset losses against tax and speeding up already agreed tax cuts.

“The abolition of the solidarity surcharge is to be brought forward to July 1 and should apply in full,” it said, referring to a tax introduced after the county’s reunification.

The document, prepared by lawmakers from Merkel’s conservatives, is to be discussed on Tuesday during a closed-door meeting of the CDU/CSU parliamentary bloc.

Germany’s coalition parties agreed last year to abolish the ‘soli’ – a tax surcharge introduced in 1991 to help finance the cost of reuniting West and East Germany – for more than 90% of taxpayers from January 2021.

Finance Minister Olaf Scholz from the co-governing Social Democrats has already suggested bringing this forward to July, which would cost the state around 5 billion euros. But Scholz is against granting the relief for all taxpayers.

The German stimulus package is expected to include relief for municipalities struggling with lower tax receipts, cash handouts for families with small children as well as further funds for companies with fewer than 250 employees.

Reporting by Michael Nienaber; Editing by Giles Elgood

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