Government moots delaying tax cuts

The German government is considering putting back its tax reform plans for a year to compensate for lost revenue from the weak economy, according to Der Spiegel magazine.

Government moots delaying tax cuts
Photo: DPA

The Finance Ministry is weighing up the possibility of deciding on the reform this year, but waiting until 2011 to implement it, to give the economy more time to recover from the global crisis.

Reiner Haseloff, economy minister for Saxony-Anhalt, and member of the ruling Christian Democratic Union said this would be a good idea.

He told website news-de, “It would make no sense to burden the public purse to such a degree that no further investment was possible. The tax reform should only be introduced when tax revenues begin to increase again, not already in 2010 or 2011.”

Leading politicians from governing coalition partner the Free Democratic Party (FDP) are still pushing for the €24 billion tax relief written into the coalition contract.

Birgit Homburger, head of the FDP’s parliamentary group told Sunday’s Frankfurter Allgemeine Sonntagszeitung, “The FDP demands a reduction in tax of an annual sum of €24 billion. With that we are holding exactly to the coalition contract. “

But the CDU is more open to the idea of delay. Wolfgang Böhmer, the party’s state premier of Saxony-Anhalt sounded sceptical of anything being possible this years.

He said, “An annual tax reduction of €24 billion is something I fundamentally consider feasible. But it certainly cannot come now under current conditions.” He said the coalition contract did not specify how much the tax reduction would amount to.

The subject is expected to be discussed at the current crisis meeting of the governing coalition.

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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.