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ECONOMY

Only half of Germans want tax cuts

In a sign of Germans’ financial priorities, just half of voters favour tax cuts right now and Finance Minister Wolfgang Schäuble – a noted tax cut sceptic – has rocketed to become the most popular politician in the country.

Only half of Germans want tax cuts
Photo: DPA

Some 57 percent of voters polled by Infratest Dimap for broadcaster ARD and daily Die Welt thought Schäuble was doing a good or very good job.

Two-thirds of voters believe Germany’s economic situation is either good or very good, yet nearly three-quarters say they have not personally profited from the upswing.

Voters are neatly divided on tax cuts. Asked whether taxes should be cut from January 1, 2013 as the ruling coalition leadership recently announced it intended to do, 48 agreed with the move and 49 percent were against it.

Yet a strong majority wants to reduce the nation’s debt, Die Welt reported. Some 70 percent believed it was more important to reduce the amount of new debt the government was taking on, while 24 percent said tax cuts were a greater priority.

Defence Minister Thomas de Maizière was the second most popular politician on 56 percent approval followed by the Social Democratic Party’s (SPD) former Finance Minister Peer Steinbrück on 54 percent and the party’s parliamentary leader Frank-Walter Steinmeier on 51 percent. Chancellor Angela Merkel sits in fifth place on 49 percent.

The poll also showed that both Steinbrück and Steinmeier would win in head-to-head in direct elections against Merkel.

Voters have a cloudy image of the chancellor right now, the poll finds. Some 85 percent believe she should take greater leadership within the federal government. On the other hand, about 80 percent believe she represents Germany well on the world stage.

Two out of three voters are disappointed with Merkel’s six years in office. They do not know where she stands, the poll shows. Yet 61 percent said they felt that, on the whole, she has done a good job.

Voters are generally happier with the four years she laboured under the “grand coalition” with her party’s traditional centre-left rivals from 2005 to 2009 than they are with her current coalition with the pro-business Free Democratic Party.

The survey polled 1,000 people on July 4 and 5.

The Local/djw

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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