Unmasking Tax Evasion: CDU and Greens Crusade Against Business Tax Havens in NRW
Conservative and Green parties intend to curb tax evasion in trade activities. - The two political parties, CDU and Greens, advocate for enforcing measures against the practice of industrial tax evasion.
Wage your battles against those shady business tax shelters hiding out in selected municipalities - that's what the ruling CDU and Greens coalition in North Rhine-Westphalia (NRW) have waged a war on. They're urging the newly formed black-red federal government to beef up the minimum business tax rate. This resolution will soon be tabled in the NRW state parliament. As per their coalition agreement, the federal government aims to raise the minimum rate from the current 200% to 280%.
Business tax is a vital income source for cities and municipalities. According to the resolution, the average rate in NRW municipalities hovers around 450%, with the highest at a whopping 700%. Nevertheless, two municipalities - Monheim and Leverkusen - are anomalies, sporting a business tax rate of a modest 250%.
Squash tax fraud
CDU and Greens in NRW pledged in their coalition agreement, back when they assumed office in 2022, to wipe out existing business tax havens from municipalities. They plan to make business tax havens unfavorable by incorporating rules in municipal finance law.
In addition, the state's financial administration will guide municipalities in identifying the true addresses of businesses. The newly formed NRW state authority for combating financial crime is already making waves by focusing on cracking down on tax fraud involving shell companies in business tax havens.
Tax dumping on steroids
CDU and Greens describe it as baffling that, despite sporting a meager rate, business tax havens in a handful of NRW municipalities generate significantly higher revenues compared to their neighboring municipalities. This brand of business tax dumping, they argue, is both unfair to neighboring municipalities and fosters letterbox company setups.
Particularly those municipalities embarking on the consolidation path and hiking up their rates as a result are vulnerable to the onslaught from business tax havens, according to CDU and Greens.
"Municipalities are playing financial jugglers"
"Waging a tax war among municipalities is a vicious cycle," lamented the director of the NRW Association of Cities and Municipalities, Christof Sommer, in response. "Municipalities are undermining each other and there are only losers."
Soaring tax rates to salvage financial chaos
Fact is, cities and municipalities are exposing themselves to significant risks by resorting to such tax maneuvers. An increase in the minimum rate is a positive step towards a resolution. However, Sommer emphasizes that only a significant improvement in municipal finances can break this vicious cycle.
The NRW Association of Cities and Municipalities had already decried the urgent need for the state government to combat unfair tax competition from business tax havens and lobby for a comprehensive federal package of measures earlier in 2023. The state's financial and judicial authorities should back the municipalities in tackling illegal tax evasion.
The ruling CDU and Greens coalition in North Rhine-Westphalia (NRW) is pushing for an increase in the minimum business tax rate as a means to combat the issue of business tax havens, aiming to raise it from the current 200% to 280%. (Finance, Politics)
The CDU and Greens, in their efforts to eliminate tax havens, plan to implement rules in municipal finance law that will make such tax havens unfavorable, and will also guide municipalities in identifying the true addresses of businesses. (Community aid, Business, Politics, General-news)
