ifo President Fuest Praises Property Tax Compromise
The ifo President Clemens Fuest has praised the compromise on property tax in Germany. “The new model is a very good solution. Property tax is better suited than most other taxes when it comes to making decentralized decisions on tax bases and rates,” he said in Munich. “Land is immobile. Fears that wealthy Laender will position themselves as low-tax states and that Laender with less financial strength will fall behind in federal competition are unfounded. The tax rates are set at the local level anyway.”
Fuest added: “Moreover, property tax is not a personal tax, so its amount is independent of who owns the property. This means there are no complications if the user of a property resides in another federal state. The only way this leads to more competition between Laender is in the sense that states whose property tax is perceived as fairer or easier to levy can serve as role models. We will have the opportunity to learn from the different experiences in different Laender, so that in the long run the best solutions can prevail.”
