Saturday, March 16, 2013

The Solidarity Tax

To explain the Solidarity Tax to an takes a minute or two.

Back as the Berlin Wall came down, and West Germans came to drive through East was obvious that things were a bit old, under-developed, and in some cases....bridges were in dire need of replacement.

So the Chancellor at the time....Helmet Kohl....made a major decision and sold the Bundestag on this simple taxation deal.  They would take the current sales tax and pump it from 13.5 percent, to 19 percent (5.5 percent rise).  For most folks in West Germany at the was a tough episode and I would imagine that over half the population wasn't sold at on this idea at all.

As you look back over three decades now, most folks will admit there's a ton of construction that has been done in East Germany. Roads have been paved.  Street fixed nicely.  Government buildings renovated.  Bridges repaired or replaced.  Schools looking almost brand-new.  The list goes on and on.

The question it finally enough?

The FDP part is discussing this move of allowing the Solidarity tax to finally end in 2019.  They think it's time for Germany lower the taxes and let the public breathe a sigh of relief.  Most Germans would be in agreement with them, and this interesting recommendation might help in the recovery of votes for the FDP.'s questionable if they will get five percent of the national vote in the fall election.

The feeling of the German government?  I doubt if they really want to discuss this or allow the tax to end.   But you can't really say this in a public forum.  The truth is....every cent of that money is likely still poured into East German construction projects, and the German government probably never thought about the idea that these projects would come to an end one day.  The construction a major part of German government funding, and to some degree....corruption.

My gut feeling?  The FDP will talk about this and might even get ten percent of German votes in the fall election.  But I just don't see the Solidarity Tax ending.  It's a major funding vehicle for the government, and they can probably still find enough things to fix in East Germany for another sixty years.  Just my humble opinion.  

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