At the weekend, the explosive position paper was suddenly no longer available on the website of the FDP parliamentary group. "We withdrew it because it was just an uncoordinated draft," said Christoph Meyer, deputy leader of the FDP parliamentary group responsible for financial policy. Before the paper is published again, it must be decided by the parliamentary group.
Obviously someone was called back. Because there is no mention of a “draft” on the nine pages. In addition, it was Meyer himself who had already commented publicly on the content in the "Handelsblatt". Unmatched, as it is now called.
The content is as unusual as the process is. On page 8 of the supposed draft there is a sentence that one could not expect in an FDP paper: There is talk of "higher" taxes and thus of something that Christian Lindner, party chairman and finance minister, has been mantra-like excluding for months. Only last week did he do this again when he pointed this out to his "Dear Colleague" Robert Habeck (Greens) in a bittersweet exchange of letters.
And now, of all times, when not only the Greens, but also the SPD, in the person of party leader Saskia Esken and Secretary General Kevin Kühnert, are talking about extended “budgetary leeway”, the Liberal parliamentary group is suddenly demanding tax increases.
In the position paper with the unwieldy title "Economic freedom instead of subsidies - our answer to the Inflation Reduction Act (IRA)", the Free Democrats in the German Bundestag list measures with which the federal government, from their point of view, can counteract the multi-billion dollar subsidy program of the US government should react.
First of all, under point 7, a reduction in income tax is announced. The intensified location competition requires "thinking about a revenue-neutral adjustment of the tax structure". Therefore, in this legislative period, proposals should be drawn up as to how structural improvements could be achieved in the income tax, also “in order to further reduce the high marginal income tax rates that are hostile to growth”. Elsewhere it is said that the Liberals also want to reduce corporate income tax and trade tax.
As far as this FDP position is known. It is in line with the leading business associations, which in their own, apparently coordinated position paper are calling for a lower tax burden on domestic corporations and partnerships.
The sentence that causes trouble in the FDP is different. Apparently aware that a comprehensive reform of the income tax rate would tear a hole in the tens of billions of euros in the national budget, the parliamentary group proposes an instrument for counter-financing. "This could be counter-financed by higher indirect taxes, fewer exemptions from the normal VAT rate and a reduction in questionable tax reductions," it says.
Higher VAT rates for lower income taxes. The outcry in the left camp was correspondingly large at the weekend when the paper became known. Because an increase in VAT would hit low earners relatively harder than high earners. They now pay a lower percentage of direct taxes on their income, but in return there are proportionally more indirect taxes, for example when shopping in the supermarket.
The accusation was quickly formulated in the social networks from the political left that the FDP wanted to make politics at the expense of the poor if they increased the reduced tax rate of seven percent on food to the normal rate of 19 percent.
"It's getting more and more blatant: the FDP is obviously discussing whether to completely abolish the reduced rate of VAT. That would be a fat price increase for food, which hits the poorest in particular!" wrote Lukas Scholle, a research assistant in the Bundestag office of Bundestag member Christian Görke from the left, via the short message service Twitter.
FDP financial politician Meyer made it clear at the beginning of the week: "We do not want to increase the VAT rate on staple foods." This should be made clear in the revised paper, which the parliamentary group may decide next week, by adding an addition to the indirect taxes. However, we can already hear from the parliamentary group that it might be best to delete the whole sentence with the "higher indirect taxes".
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