Friday 8 July 2011

poll tax

Ever pragmatic and with a healthy dose of skepticism, the German public is divided over pre-election promises to lower taxes. The survey does not delivery overwhelming verdicts either for or against cutting personal taxes over austerity, shoring up funds for a rainy-day, but a clear majority is doubtful that any reduction or reprieve would translate to any appreciable household savings. It reminds me of the excruciating and mean-spirited debate last year over increasing the monthly allowance for families on welfare (Hartz IV) that netted five euro in the end. Of course, allotted over all recipients, that's quite a monthly cumulative sum but it probably was more an insult than a help individually. With German employment at record highs and the export-mechanism churning strongly, the government is realizing some windfalls but it is still scheduled to take on more public debt. About half of the respondents were more in favour of sustaining their current tax situation and not undermine the economic recovery or handicap the ability to weather future turmoil. Most further view this tax-cut proposal as a myopic campaign-promise, which probably fails to factor in (I think) the loss of Zivildiener or Zivis with the end of mandatory conscription for young Germans. Without this labour pool to draw from, I think, social services will become more expensive to provide, and no one would want to see a cut in that area. If the government insists on paying back the people, maybe they'd do better to roll back the Value-Added Tax (Mehrwertsteuer, sort of like a national sales tax) by a percentage point. Everyone, regardless of their tax-situation, would see an immediate benefit and cost to the treasury, I think, would be minimal in the long-term.