SPD on finance and taxes

The SPD wants to raise the municipalities' share of shared tax revenue from 12.75 to 15 percent. At the same time, there should be fewer grant programs and higher lump-sum investment payments so that cities and towns can decide more for themselves.

Cities and towns should get more money. Their share of certain taxes should rise from 12.75 to 15 percent. There should be fewer separate grant programs. Instead, towns get more money they can freely use for investments.

The higher share (the so-called Verbundquote) is meant to give municipalities room to carry out voluntary tasks in addition to mandatory ones. The program argues that two-thirds of investment takes place in cities and towns and that basic public services are organized there. State planning is to be reformed, and regional and structural funding aligned with actual structural weakness and need. The SPD wants to strengthen cooperation between municipalities through financial incentives and fewer bureaucratic hurdles, and to support pilot projects.

The SPD wants to abolish the Schuldenbremse (debt brake) at the federal level and in Bavaria and launch a decade of investment. In its view, a capable state is needed, and neglected investment amounts to hidden debt at the expense of future generations.

Today the state may take on only a little new debt. This rule is called the debt brake. The SPD wants to get rid of it. Then the state can put more money into schools, housing, buses and trains.

Investment is to go into jobs, climate protection, housing construction, public transit, equal living conditions and social justice. The program cites the euro crisis, the pandemic, the war in Ukraine and inflation as evidence of the need for a strong state. The SPD rejects cuts to schools, health, care, public transit and housing. It argues that today's investment yields higher tax revenue later.

The SPD wants to keep the Gewerbesteuer (local trade tax) as a revenue source for municipalities and make it fairer. It wants to counter so-called trade tax havens with stricter audits and a higher minimum rate.

Companies pay a trade tax to their town. The SPD wants to keep this tax. Some towns attract companies with very low taxes. The SPD wants to make that harder and raise the lowest allowed tax rate.

According to the program, cutting the rate to the minimum fuels a race to the bottom among municipalities, often at the expense of neighboring towns. Some practices in such towns are said to be unlawful already but go unchecked by the authorities. The SPD wants to have unlawful tax arrangements audited and challenged more actively. It intends to push for the higher minimum rate together with its parliamentary group in the Bundestag and the municipal associations.

The SPD wants to strengthen Bavaria's tax authorities in staffing and organization so that tax evasion and money laundering are detected more effectively. Vacant positions would be filled and the workforce substantially increased. The party also backs a national reporting requirement for tax arrangements and mandatory cash registers.

The SPD wants more staff in the tax offices. That way the state can find tax fraud more easily. Companies would have to report tax tricks. Shops would have to use a cash register.

As a first step, the roughly 1,400 vacant positions in the tax administration would be filled and staffing needs calculated regularly again, which the platform says has not happened since 2000. As a second step, the number of staff would rise from about 15,000 to 20,000. The SPD expects faster audits, higher revenue for the state and its municipalities, and a level playing field for businesses. It supports extending the reporting requirement for tax arrangements to the national level. Mandatory cash registers are meant to curb cash-register fraud, which the platform estimates costs 15 to 20 billion euros a year nationwide.

The SPD wants to levy the wealth tax again and reform the inheritance tax so that very large fortunes contribute more to funding public tasks. Low and middle incomes would get relief, while the top five percent of earners would pay more. The party bases this on the ability-to-pay principle and on strengthening Bavaria's finances.

The SPD wants a tax on very large fortunes again. People who inherit very large fortunes would also pay more tax. People with low and middle incomes would pay less tax. People with very high incomes would pay more.

Inheritance tax advantages for very large business assets, which the platform calls excessive privileges, would be abolished. According to the platform, heirs of housing companies with more than 300 units and of the largest business assets currently pay no inheritance tax. The additional burden is meant to fall only on the wealthiest one percent and not put jobs at risk. As an example of relief for low and middle incomes, the SPD names a larger increase in the basic tax-free allowance. In the party's view, labor is taxed too heavily and wealth and inheritances too lightly.