Germany to Impose Capital Gains Tax

BERLIN (AP) — Germany's governing coalition has agreed to propose a new tax on individuals' profits from stock, real estate and investment fund holdings as it struggles to plug a hole in the budget and keep down the country's deficit, a senior aide to Chancellor Gerhard Schroeder said Monday.

The capital gains tax will be imposed at a rate of 15 percent, Olaf Scholz, the general secretary of Schroeder's Social Democrats, told ARD television. Under current rules, investors are exempt from tax on gains if their shares are held for at least a year.

``We have found a very moderate solution by international standards,'' Scholz said. The move by the Social Democrats and their junior coalition partner, the Greens, is subject to approval by parliament.

Since winning re-election in September, Schroeder has angered Germans and triggered protests by medical workers with plans to close tax loopholes, cut subsidies and squeeze savings out of the national health insurance system. As part of emergency budget measures, parliament on Friday voted to raise a payroll tax that currently funds retirement benefits.

Health Minister Ulla Schmidt touched off a new furor by suggesting in weekend interviews that voluntary private old-age savings plans introduced during Schroeder's first term may have to be made mandatory if not enough people sign up over the next few years.

Last week, the government announced that stagnation in Europe's biggest economy threatens to reduce projected tax revenue by 31.4 billion euros (31.4 billion) this year and next. An independent panel that advises Schroeder on economic issues said Germany will breach European Union limits on government budget deficits not only this year but also in 2003.

In post 15, it should say the CDU is 45%, not 55%.

The FDP, CDU's traditional partner is at 5%. Together they reach 50%.

longjack

I live here...and even pay taxes to these dimwits. I am often shocked how stupid the common German is about taxes and government revenue. But this capital gains tax simply is icing on the cake.

There were a fair amount of Germans who were fearful of having no pension at 65...and were putting money into investments. These people will immedately stop new investments....which will quickly depress the entire market and slow business growth. One has to wonder what the priority was during the final meeting. The idiots attending the meeting likely thought that the rich of Germany would pay the tax and therefore benifit the government in terms of a captial gains tax. The common worker, who never invests, would not be hurt by this. If I were a German with money for investment...I would simply shift my funding to buying property. The Germans got exactly what they deserved....they believed the Shroeder blast of Bush as their number one issue....and here they are....with an economy going down the tubes....this was just six weeks ago. What a bunch of dimwits!

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