The new German coalition

October 24, 2009 By 2 Comments

It is almost a month since the elections in Germany, and finally a coalition settlement has been reached between the CDU/CSU and the FDP.

Let’s take a look at what it will mean…

Tax reforms

Tax reforms worth €24bn have been promised (that’s British billions), although they will not happen until 2011.

My thoughts: no rush then to get those in, plenty of time for that to change

Income tax will be reformed, with a more “banded” type of system.

I’m sure I’ve heard that before.  I’m just not sure after which election…

VAT rates look to stay the same, but there will be some changes are to what qualifies for the reduced 7% rate.

Benefits

Child benefit should be going up in 2010 to 184EUR per month for the first and second children, higher for others.

Well that’s something, it went up 10EUR this year, so another 20EUR will be nice, but bear in mind that despite inflation it has otherwise been stuck at 154EUR since the Euro was introduced in 2002!

Health

No immediate changes are planned to the health system, but instead the coalition will wait for recommendations to be made by a Government committee.

Oh great!  So we’re stuck with the Gesundsheitsfond.  I guess there is no chance of paying less into it and the self-employed will still be at a disadvantage when it comes to sick pay.

Ministers

Wolfgang Schäuble (CDU) moves from the interior ministry (sort of the Home Office) to the finance ministry (ie. the Treasury).

I find this a strange decision, but it could make a lot of people in the IT world happy.

Ursula von der Leyen (CDU) stays at the family ministry.

I’m sure that many in the IT industry would have liked to see her move as well – along with Herr Schäuble she was awarded the “Big Brother Award” this year because of her policies, which have often been criticised by IT specialists and journalists alike.

Karl-Theodor zu Guttenberg (CSU) moves from industry to defence.

I don’t get this one, because during the campaign and even after the election, I thought all the parties were “agreed” that he was the right man for the job his was in.  What happened?

Guido Westerwelle (FDP) will be foreign minister and vice-chancellor

No real surprise here.  The foreign minister is an important role in the German Government, and being vice-chancellor at the same time will probably give him the power to take decisions at high-level meetings without Frau Merkel.  Will she be spending more time in Germany now?

There are also many new ministers that I do not (yet) know much about, or even have an opinion on.

So is it good for Germany?

It’s too early to say.  With so many fresh faces in the cabinet I’m hoping that there will finally be some movement on issues that were just forgotten under the previous Government.  On the other hand, I have a feeling that the new one might just be taking things a little to relaxed, announcing plans now that will not come to fruition for another 15 months.

Or are they just taking things slowly to make sure they get new laws right the first time?

Filed Under: Current affairs, Politics Tagged With: , , , ,

Should the rich pay more tax?

October 23, 2009 By 3 Comments

BBC News reported today about an idea circulating in Germany about higher taxes for the rich.  There is talk of a 5% “wealth tax”, which in theory would mean the most wealthy German residents helping to stabilise the economy.

I don’t believe it would work, and it is probably the wrong way to go about solving the economic problems here.

Why it would not work

It is very difficult in Germany to pass laws that only affect part of the community.  So you can tax people for driving a car for example, and you can give tax relief for driving an environmentally friendly car, but you cannot really offer car tax relief for someone on low income.  If they afford the car, then they can afford the tax!

The best example recently was the rule that you could only claim back tax on the cost of getting to work if you had to travel more than 20km each morning.  Anyone living closer lost out.  It took a couple of years and several court cases to get the rule revoked and tax rebates paid out to thousands of people.

In fact, income tax is one of the few taxes that I know of that has different bands rather than just percentages.

So the chances are, that someone somewhere would try to get a “wealth tax” that only affected people with a certain amount of capital overturned, because it was not treating the entire population equally.

Either that or the entire population would have to pay and even those with little savings in the bank would end up contributing towards the financial recovery in a way they would prefer not to.

Why it is the wrong way

The bureaucracy in Germany is extensive to say the least.  Surely there must be room for improvement here and ways of saving money without cutting services.  In fact, I have heard all sorts of ideas about this from the main political parties over the last 10 years, but none seem to come to fruition.

Instead of increasing taxes, it would be better to help companies improve their turnover – resulting in the long run for more income for the state.  In my opinion, increasing the VAT rate a few years ago was not the right decision.

Give the people money in their pockets by not taking it out in the first place, and the chances are that they will spend it or save it to earn interest.  Either way, it will be taxed.

What you may not know…

… is that Germany already has a wealth tax (Vermögenssteuer) – except that it was declared unconstitutional in 1995 and although it still exists in the tax statutes, it is not applied as present.

If the new Government really does want to re-introduce it, then they will have some hard thinking to do first.

Filed Under: Current affairs, Tax Tagged With: , ,

Hessen votes… again

January 18, 2009 By 5 Comments

I could use one of my favourite quotes today: “Same Procedure as Last Year?”

You see today, almost one year to the day, Hessen has to return to the polling stations and vote for a new state government (Landtag).

But it would not be right to say that nothing has changed in that year and we are repeating the excercise.

Let’s take a quick look at the parties:

CDU

The CDU has been fairly quiet this year, although I did see them out on a local supermarket car park last year canvassing for votes.  Compaired to last year, they have stopped talking about crimes allegedly committed by foreign youths, and have got on with the work of producing some new ideas, or just promoting those that worked well in the past.  In my opinion, this may well be enough to win.

SPD

The SPD had a turbulent time last year.  Although at they were in a position to form a minority coalition last year twice, both attempts were blocked by MPs from their own party.  This has definitely not helped their reputation.  It also did not help that they were going to accept help from a party (Die Linke) that they had previously said they would not work together with.

But their candidate last year, Andrea Ypsilanti, probably did not help matters by trying to stay on for a second chance, and even when she did make way for a new candidate, it was her personal choice who were selected to stand and she herself remains both head of the local party and of the parliamentary group.

I don’t believe that this is a good way to show that the party has learned from last year’s experience and is ready to make changes.  In fact, it looks like quite the opposite.

Another critisism of the SPD is that they are spending too much time on criticising the CDU, and not enough time telling voters what their own policies would be, if elected.

Oh, and appearing on the celebrity edition of “Who want’s to be a Millionaire?” probably didn’t help Fr.Ypsilanti’s image either…

FDP and Grüne

The FDP and the Green party have been very quiet this time round.  We have not had any election pamphlets in our letter box, and I have not seen anyone canvassing out on the streets (or supermarket car park).

In the media, they appear to be keeping a low profile, especially the Green party.  This is in comparison to last year, where the lines were clearly drawn about who would enter a coalition with whom.

Die Linke

You could say that this is the party that caused all the problem last year, by entering the Landestag and making it so difficult to form a coalition amongst the other parties.  But perhaps that wasn’t such a bad thing, because it meant that we were able to see the true face of some of those parties’ politics.

New Trends

Bread rolls courtesy of the CDU

Bread rolls courtesy of the CDU

Many of the parties have take a look at the US elections last year, and have been trying to emulate Barack Obama’s success on the internet.  They have are using Twitter, Wer-kennt-wen, YouTube, and even make.tv.  This might explain why we haven’t had any flyers in our letter box from most of them.

The morning I even found a bag of rolls with portions of liver sausage and jam from the CDU, with a note on them asking us to go and vote.  They had literally left a bag of rolls on everyone’s doorstep or hanging on their front door handle in the entire neighbourhood!

Now, I may be a big fan of Web 2.0, but a free bag of rolls on a Sunday morning is a lot more use to many people than a video podcast.  Not that it will make any difference to my decision today, as I am not eligible to vote in this election.

But at the end of the day, I am beginning to wonder who will have had a bigger influence on voters: the Koch or the Bäcker?

Filed Under: Current affairs Tagged With: , , , , , , , ,

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