Tax and Fiscal Policy
The ultimate impact of the financial crisis on the realeconomy is still unknown. The BDI urges maintaininga balance between economic measures and budget consolidation.The government must be in a position to reactquickly, but budget consolidation is the long-term priority.Amendments must be made to income tax laws: the coldprogression must be reduced and, in a second step, thesteep progression must be levelled. This will put moremoney in the pockets of the working middle class who willdiscover that it pays off to work hard, as well as increasingacceptance of the social market economy.
The company tax reform of 2008 improved the tax codein Germany, in particular by reducing corporate taxto 15 percent. Although on the right track, the reformsactually exacerbate the crisis: amendments must be madeimmediately to the thin cap rules, constraints on losscarry-forwards, taxation of business relocation and tradetax additions if German companies are to maintain theirglobal competitiveness.Many areas and facets of company tax law are in need ofrevision and reform.
It is extremely important for the BDIto work through the long list of shortcomings in close cooperationwith the fiscal authorities and government inorder to produce modern taxation law that is in tune withthe demands of practicality.
