On September 26, 2021, a new Bundestag will be elected in Germany. In order to generate government revenue and fill gaps in the treasury, which have been widened not least by the Corona pandemic, tax policy has a key role to play. The problem could be that, due to the sharp increase in debt, there is an overemphasis on fiscal policy motivated by budgetary considerations.

The election programs of the parties are an indicator of the directions in which the respective parties want to go with their tax policy. The SPD (social democratic party of Germany) and Die Linke (democratic socialist party) focus on higher taxation of high incomes and lower taxation of low incomes. Bündnis 90/Die Grünen (green political party) are also more on the side of the SPD and Die Linke in terms of tax policy. They are also calling for the introduction of a wealth tax. The FDP (free democratic party, a liberal political party) represents the antithesis to these tax programs and calls for greater relief for companies and citizens, as well as market-based mechanisms in the area of climate protection. Tax reduction proposals also come from the ranks of the CDU (Christian democratic union) and CSU (Christian social union). The CDU/CSU and the Liberals (PDF) agree on a maximum tax burden of 25 % for companies and reject a wealth tax.

Excerpt of the tax policy content of the election programs of the individual parties*:

Party	Contents of the election program
Bündnis 90/Die Grünen (green party)	Income	Increase in top tax rate (single/spouses) • from EUR 100,000.00/EUR 200,000.00: 45 %. • from EUR 250,000.00/EUR 500,000.00: 48 %
	Corporate taxes	• EU-wide common tax base with Minimum tax rate of 25 % in the medium term
	Depreciation	• Attractive and time-limited depreciation terms • Investments for digitization and climate protection depreciate temporary with at least 25 %
	Real estate transfer tax	• Preventing Share Deals and Proportionate Taxation of real estate ownership in the case of company disposals • Allow states to raise the real estate transfer tax rate for large housing companies and lower it for private buyers
	Assets	• 1 % for assets above EUR 2 million. • Privileges for business assets and consideration of special circumstances for medium-sized and family businesses
	Climate/Environment	• Reduction of subsidies for diesel, kerosene, displacement and high-horsepower company cars • Investment security through “Carbon Contract for Difference” system • Plastic tax (EU-wide)
CDU/CSU (Christian democratic union)	Income	• Longer-term goal: Fundamental reform of income tax rate including relief for middle and lower incomes
	Corporate taxes	• Capping the tax burden on corporate profits at 25 % in the long term • Establish neutrality of legal form, improved preferential treatment of retained earnings • Improved imputation of trade tax • reduced low tax limit
	Depreciation	• Re-introduction of declining-balance depreciation for movable fixed assets • Better depreciation for digital future technologies • Faster depreciation options for investments in IT security • Faster depreciation for climate protection investments • Extension of special depreciation for new rental housing construction
	Real estate transfer tax	• Countries: Allowance for real estate transfer tax in the amount of EUR 250,000.00 for adults plus EUR 100,000.00 per child for the first-time acquisition of owner-occupied housing.
	Assets	• Rejection wealth tax
	Climate/Environment	• Establishment of a global emissions trading system – Abolition of the EEG levy • Introduction of WTO-compliant CO₂ border adjustment • Air transport tax exemption for alternative fuel flights • Improve tax incentives for energy-efficient refurbishment, especially for commercial buildings and rented properties. • Taxes and charges in rail freight transport “in the spotlight”
SPD (Social democratic party)	Income	• Increase by three percentage points EUR 250,000.00/EUR 500,000.00 (single/spouses) • Relief for low/middle incomes
	Corporate taxes	–
	Depreciation	–
	Real estate transfer tax	• End evasion of GrESt (real estate transfer tax) with share deals
	Assets	• 1 % for very high assets • Allowances for individuals and companies
	Climate/Environment	• CO₂ limit tax • Abolition of EEG (renewable ernergy sources act) levy; financing from federal budget and CO₂ price • Examination of further compensatory measures, such as per capita bonus with increasing over time CO₂ price
FDP (Free democratic party)	Income	• Top tax rate from EUR 90,000.00 • Regular adjustment of the basic parameters • Flat-rate home office allowance for income-related expenses • EUR 1,000.00 Exempt amounts for savers, employee shareholdings, further training
	Corporate taxes	• Reduction of corporate tax rate to 25 %
	Depreciation	• Permanent declining-balance depreciation for movable assets • Uniform and shortened depreciation periods of max. three years for digital assets • Increase of the GWG (low-value assets) limit • Improving the depreciation options for Residential investment up from 2 to 3
	Real estate transfer tax	–
	Assets	–
	Climate/Environment	• Extend EU emissions trading to all sectors • Reduction of electricity tax to EU minimum level (long-term abolition)
Linke (Socialist party)	Income	Income tax rate: • EUR 14,400.00 Exempt amount • 53 % as of EUR 70,000.00 taxable income • 60 % from EUR 260,533.00 taxable income • 75 % over EUR 1 million taxable income
	Corporate taxes	• Increase KSt rate (corporate tax rate) to 25 % • EU-wide minimum tax for companies
	Depreciation	–
	Real estate transfer tax	• Proportionate real estate transfer tax for share deals of 50 % or more
	Assets	• 5 % for assets above EUR 1 million. • EUR 5 million allowances for companies • Progressive wealth tax on assets above EUR 2 million with allowances similar to a wealth tax • Harmonization at EU level, if necessary
	Climate/Environment	• EU-uniform kerosene tax, full VAT rate on Air tickets abroad • Abolition of unjustified industrial rebates for eco-tax, network fees, emissions trading and in the EEG

*EY Tax & Law 2/21 p. 16.

Regardless of the outcome of the elections and the coalition formed, it is to be expected that climate policy tax measures will be implemented. Conceivable are the CO₂-Steuer respectively the increase in CO₂-Price to achieve the climate policy goals. Tax changes in sales taxation are also possible. In the area of income tax, lower incomes could be taxed less than before, while higher incomes could be taxed more heavily. The abolition of the solidarity surcharge without replacement and changes of wealth and inheritance tax are considered unlikely.

Due to the high corporate tax burden in Germany by international standards, the Federation of German Industries is calling for a reduction in the effective tax burden from the current level of around 31 % to 25 %. This would put Germany in the middle of the field in an international comparison of the major industrialized nations. A tax cut would have positive effects on the liquidity and investment strength of companies and would safeguard jobs. Germany would also still be above the emerging global minimum tax of 15 %. It is questionable whether such a reduction in the effective tax burden is possible (and desirable) given the current high level of debt. At least the CDU/CSU and FDP have perceived the desire for a tax cut. This could provide economic incentives and thus also have a positive impact on tax revenues.

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We have collected the information available on our Corona news portal which includes a constantly updated overview regarding the measures to tackle financial impacts of the Corona crisis.