Fiscal Court decides on Monday
Taxpayers’ League expects triumph over solos
01/29/2023 3:28 p.m
FDP and CDU wanted to abolish it years ago, but top earners and corporations still pay it: the solidarity surcharge. A married couple, on the other hand, moves to the Federal Fiscal Court. The taxpayers’ association assumes that this doubts the constitutionality.
The taxpayers’ association expects the Federal Fiscal Court (BFH) to have the solidarity surcharge on taxes checked by the Federal Constitutional Court. “I assume that the Federal Fiscal Court will question the constitutionality of the solo from 2020,” said association president Reiner Holznagel of the “Rheinische Post”. The BFH will finally have this clarified by the constitutional judges. Their verdict is expected in a year at the earliest.
For the upcoming decision of the highest German finance court in Munich on Monday, he therefore expects a stage victory. The BFH wants to decide whether the solidarity surcharge is still legal. It is about annual federal revenues of around eleven billion euros. Since 2021, only top earners and corporations have had to pay the surcharge of up to 5.5 percent of income and corporation tax. About 90 percent of taxpayers are exempt.
A married couple argues before the BFH that the currently applicable solidarity surcharge was introduced in 1995 to finance German unity. With the expiry of the Solidarity Pact II at the end of 2019, the solidarity contribution is therefore also obsolete. Many in the legal world see it that way.
violation of the principle of equality
“The majority of voices in legal literature meanwhile, i.e. from 2021 at the latest, consider the solidarity surcharge to be unconstitutional,” wrote the BFH in its explanations. “On the one hand, the purpose of the survey has been omitted and, on the other hand, the violation of the principle of equality is obvious,” said Holznagel. “The solidarity surcharge is no longer paid by all income earners.”
The federal government will thus take in around 54 billion euros from 2020 to 2023. “Not only the really rich, but also many small and medium-sized companies, skilled workers and skilled workers pay the solos. Pensioners also pay the special tax of 5.5 percent as part of the withholding tax on capital gains,” said Holznagel.
The partial abolition of the soli from 2021 goes back to a decision by the grand coalition of Union and SPD at the end of 2019. The Finance Minister at the time, Olaf Scholz, rejected the complete abolition of the surcharge demanded by the Union when it was passed in the Bundestag. In view of the tasks still to be shouldered in German unity, there were “good reasons” not to completely abolish the levy, the SPD politician said at the time. The current Minister of Finance, Christian Lindner, is campaigning for a complete abolition.