German industry: Tax cuts needed to prevent jobs moving abroad

The tax burden on companies operating in Germany needs to be eased to safeguard jobs, the Federation of German Industries (BDI) said on Friday.

Companies were under enormous international pressure BDI President Dieter Kempf told dpa, cautioning that government was denying reality in this regard.

The negative consequences of Germany’s comparatively high taxes had to be made clear, Kempf said.

“People have to be told quite honestly that this will lead to doing business in Germany being less profitable than doing business abroad,” he said. “Foreign investment in Germany, and thus jobs of course, will be jeopardized.”

German companies would also shift investments abroad, he said.

Kempf said Germany’s tax burden was high by comparison with other European countries and other countries in the Organization for Economic Cooperation and Development (OECD).

Anyone could check this, he said, calling for an “exit from the one-way street of ever-rising taxation.”

Noting current economic stagnation, Kempf called on the German government to cut corporate taxes. “The tax rate on business should be 25 per cent at most. The EU average is 21.7 per cent,” he said.

There have long been calls from business representatives and from politicians in Chancellor Angela Merkel’s conservative bloc for tax reform, given tax cuts in the United States and elsewhere.

But Finance Minister Olaf Scholz of the Social Democrats (SPD), Merkel’s coalition partner, has thus far rejected such moves. Competitive tax cuts between countries need to be avoided, if states are to fulfil their obligations, Scholz says.

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