Despite country criticism
The federal government does not want to change the property tax law
Encourages the states to “actively exploit necessary changes in state law”: Christian Lindner. photo
© Michael Kappeler/dpa
Federal Finance Minister Lindner rejects changes to the new property tax regulation, despite loud calls from the federal states for flexibility.
The federal government wants the new regulation despite loud demands from the federal states Don’t touch property tax anymore. The law gives the states enough leeway to adapt tax calculations to regional needs, argued Finance Minister Christian Lindner in a letter to his colleagues in Rhineland-Palatinate and North Rhine-Westphalia, which was available to the German Press Agency. A reform by the federal government cannot be implemented in a legally secure manner in such a short time.
The property tax should be calculated according to the new rules from January 1, 2025. In many large cities, however, an imbalance is now becoming apparent: while businesses will save taxes in the future, apartment and house owners will have to pay more. The federal states therefore called for a legal opening clause to be established. This would allow municipalities to split property taxes and set different assessment rates for residential and commercial property. These municipal assessment rates ultimately determine the amount of the property tax.
Property tax is one of the important sources of income for municipalities
Last year, according to a survey by the German Chamber of Commerce and Industry, one in seven municipalities with more than 20,000 inhabitants increased their assessment rate. Property tax is one of the important sources of income for municipalities, which they use to finance, among other things, schools and kindergartens as well as roads and playgrounds. Actually, the property tax reform should not lead to an additional burden on citizens, at least on average.
The imbalance between residential and commercial properties, especially in larger cities, is due to the fact that commercial properties have often increased in value significantly less than residential properties since 1960. Where there has been a high increase in the value of residential property, a disproportionate property tax burden can now be expected.
Lindner encouraged the states to “actively exploit necessary changes in state law.” “A federal regulation would be subject to considerable uncertainty both in terms of the timeline and in terms of legal certainty,” he wrote in his response to a letter from the Finance Minister from North Rhine-Westphalia, Marcus Optendrenk, and the Finance Minister from Rhineland-Palatinate, Doris Ahnen. In addition, new considerations in the states would not be avoidable – just like in the five federal states that use their own formulas to calculate property tax and not the federal model.