SPD chancellor candidate Olaf Scholz wants to give both contributors and pensioners comprehensive tax relief in response to a ruling by the Federal Fiscal Court (BFH) on double taxation. The Picture on sunday Scholz said: “Firstly, I don’t want to make the contributions to the pension insurance fully tax-deductible until 2025, but rather beforehand. Secondly, I want to push the full taxation of pensions further back – it should only come into effect in 2060 and not, as previously planned, in 2040 “. This means that millions of retirees and contributors can expect extensive tax breaks in the years to come.
In a landmark ruling at the end of May, the BFH objected to the pension taxation that has been in force in Germany since 2005. In particular, future generations of pensioners could face unconstitutional double taxation, criticized the Munich judges and called on the federal government to make corrections.
Since 2005 pensions have been gradually taxed higher, initially at 50 percent, until 2040 they should be taxed in full according to the current Retirement Income Act. In return, contributions to the pension insurance are also gradually recognized for tax purposes to an increasing extent – initially only 60 percent in 2005, by 2025 this should be 100 percent possible.
Scholz now wants to correct both because, in the opinion of the BFH, the state counted to the disadvantage of pensioners. Therefore, the SPD candidate for chancellor wants to prefer the deductibility of pension contributions. According to experts, that alone is not enough to avoid double taxation. That is why Scholz also wants to postpone the full taxation of pensions by 20 years to 2060. This delay is likely to cost the state billions of euros. But even if Scholz does not become chancellor, every other federal government would have to react similarly to the BFH ruling after the federal election in autumn.
Men more often affected
Around 142,000 pensioners had already appealed their income tax assessments before the judgment. According to the BFH, men could be more frequently affected by double taxation than women because their statistical life expectancy is shorter and they are less able to draw tax-free pensions in old age. In addition, unmarried people could be more likely to be affected than married people and the self-employed more often than employees.
Scholz also gave a guarantee for a stable pension level of 48 percent. “Every contributor should be prepared for a CDU / CSU government that the pension level will fall,” said the Federal Minister of Finance. “That won’t happen with me. I guarantee a stable pension level of 48 percent.” He did not share any reservations about financing in the coming decades. “If there are many jobs with decent wages in Germany, the pension is secure. That is what it is about.”