German coalition says no to flat tax

The new German ‘grand coalition’ has backed away from radical changes to the
country’s tax system.

Angela Merkel, the new chancellor, had, through her close links with Paul
Kirchhof, made overtures towards the idea of introducing a flat tax system.

Coalition politicians have indicated that cuts to corporation tax are likely,
but the far-reaching reforms envisaged by Kirchhof and others were ruled out
yesterday, the FT reports.

Discussions are ongoing as to how to finance the corporation tax cut, which
is thought necessary to boost the economy.

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