Raising property and business taxes are a popular way of getting money into municipal coffers. More than half of all cities and municipalities have increased it in recent years – nobody has reduced it.
UIn order to get more money into the coffers, more than half of the cities and municipalities in Germany have increased their taxes in recent years. This is evident from a current analysis by the consulting firm EY. According to this, 53 percent of all municipalities have raised the trade tax for companies at least once since 2012. 60 percent screwed up the property tax B for built-up and buildable land. Taxes were hardly lowered anywhere during the period.
The two taxes are very important sources of income for cities and municipalities and can be determined by them using the so-called assessment rates. From state to state and also within the individual states, there are sometimes serious differences, depending on the financial situation of the municipalities. In terms of property tax, for example, in North Rhine-Westphalia alone, the state with the highest assessment rates on average, the range extends from 260 (Harsewinkel near Bielefeld) to 959 percent (Bergneustadt in the Bergisches Land).
There was hardly any increase in the south
In Saarland, for example, according to the study, every municipality without exception has increased property tax since 2012, 97 percent in Hesse. In Bavaria, on the other hand, owners only had to pay more in a good quarter of cities and municipalities. A similar picture emerges with the trade tax: While in Hesse a good 86 percent of the municipalities increased the rates, in Bavaria it was not even 20 percent. There were also many increases in North Rhine-Westphalia and Rhineland-Palatinate, and rather few in Baden-Württemberg.
“Highly indebted municipalities in structurally weak regions in particular had to turn the tax screw a lot in order to even have the chance of a balanced budget,” said EY expert Bernhard Lorentz. “In contrast, prosperous regions, especially in the south of Germany, have largely been able to forego tax increases in the past few years.” That would put some in an even worse position in the competition for locations, while others strengthened their attractiveness as a residential and business location.
From the point of view of the municipalities, according to the study, the tax increases have paid off for the time being. The surpluses have risen, the total debt has fallen – that reduces the pressure to act. “On top of that, from the point of view of those responsible for politics, the limits of what is reasonable have now been reached in many places,” said Lorentz. However, a deterioration in the general economic situation could quickly bring local authorities back under pressure, he warned.