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The German government wants to abolish fiscal equalization

26.10.2012

At the present time in Germany there is a system of equal taxation among all Federal lands. It means that the income tax rate is the same in all lands irrespective of the level of life, the state of the labour market, as well as of the volume of financial flows to these lands.

The other day representatives of the party «Christian-democratic Union (CDU) have made a proposal on the reform of the provisions of the legislation and establishment of such tax rates on income tax, which

will vary depending on the above-stated indicators.

Such rates will define the authorities of each of the land itself. This proposal was supported also by the Finance Minister Wolfgang Schaeuble. The gain of the proposal is to stimulate the development of lagging regions to achieve a more equitable development of the country.

On the basis: http://www.fdp-bayern.de/Bayern-klagt-gegen-den-aenderfinanzausgleich/13306c24332i1p/index.html

Expert’s opinion

The scenario of events reminds of the situation with the transport tax in the Russian Federation.

It’s interesting that there is at least one subject in the Russian Federation, where it would have taken a decision to decrease or eliminate the transport tax?

Do not say about Chechnya. There are friendly people, and Kadyrov cares about his people. There is no local transport tax.

But in Germany... Are there any politicians, who do not yield to the temptation to raise the tax to the maximum?

Lomakin Yaroslav ( Managing Partner of Honest & Bright Company Ltd)

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