The Federal Minister of Finance wants to reduce interest on arrears and reimbursements in the tax system.
(Photo: dpa)
Berlin Finance Minister Christian Lindner (FDP) wants to significantly reduce interest on additional tax claims and refunds. So far, 0.5 percent per month or six percent per year were due. The rate is to drop to 0.15 percent per month, i.e. 1.8 percent annually. This emerges from a draft law by the Federal Ministry of Finance, which is available to the Handelsblatt.
The high tax rates have been causing trouble for years. Those who are in arrears with their back taxes have to pay six percent a year to the tax authorities – despite the record low interest rates. This practice has been criticized time and time again. Last summer, the Federal Constitutional Court declared it unconstitutional and demanded a retrospective correction from 2019.
Lindner is now complying with this with its draft law. He is due to join the cabinet at the end of March. It then has to be approved by the Bundestag. The federal states must also agree. Because they are also affected by the tax losses that a change entails.
Lindner’s proposal means relief for taxpayers – for the Treasury correspondingly less revenue. According to the draft law, the tax shortfalls this year would add up to 2.5 billion euros due to the retroactive effect.
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In 2023 it would be 530 million, then 705 million in 2024 and then around 800 million annually thereafter. The federal, state and local governments each bear about a third of the losses.
“After years of discussions, there is now a balanced and fair proposal on the table, which corrects the long-established shortcomings in the interest rate of the tax offices and puts them on a solid and future-proof footing,” said Markus Herbrand, spokesman for fiscal policy for the FDP parliamentary group. “It is high time that this tolerable issue, on which the Treasury has charged exorbitant interest rates for many years, is sealed.”
The proposal of the Federal Ministry of Finance is good, it must now be implemented in the parliamentary process, said Herbrand. The financial expert also knows about possible resistance in the Federal Council. “I’m now looking very closely at the federal states that will be significantly affected by the law.”
More: Six percent tax interest is too high: what the verdict means for tax authorities and payers