Business lobbies have erupted in criticism over the Social Democratic Party’s (SPD) proposed overhaul of inheritance tax, branding the plans ill-timed and potentially damaging to Germany’s vital family-owned businesses. The proposed reforms, slated for public unveiling in Berlin this Tuesday, are facing a barrage of opposition from industry representatives who warn of stunted investment and diminished competitiveness.
The German Chemical Industry Association (VCI) voiced strong disapproval, characterizing the proposed changes as sending a “misleading signal at the wrong time”. Berthold Welling, the VCI’s Head of Legal and Tax Affairs, highlighted the dissonance between government rhetoric praising the importance of small and medium-sized enterprises (SMEs) and the reality of impending tax burdens. “While politicians pay lip service to the significance of the Mittelstand and family businesses, we are facing unnecessary financial pressures” he stated. Welling argued that the bulk of family business capital is tied up within the operating enterprises themselves and that any additional taxation would demonstrably reduce investment capacity, potentially jeopardizing jobs. He emphasized the need for planning certainty among these businesses, not renewed debates surrounding tax increases.
The “Family Businesses and Politics” Foundation echoed these concerns, asserting that the SPD’s model “will ultimately harm us all and leave us with a lower level of prosperity”. Foundation board member Rainer Kirchdörfer warned of “drastic tax increases” impacting both mid-sized and large family businesses, arguing that increased tax burdens during a protracted recession would significantly impair competitiveness and necessitate cuts to private investment.
Adding complexity, the SPD’s plan reportedly includes an increase in the inheritance allowance, coupled with the elimination of the ten-year rule allowing for repeated inheritances or gifts within a defined allowance. This element, in particular, has drawn ire from business leaders, who fear it will create unexpected and substantial tax liabilities.
Kirchdörfer lambasted the SPD’s approach as an outdated “tax increase concept pulled from the archives” accusing the party of exacerbating structural weaknesses and diminishing the ability of German companies to compete globally. He underscored the potential detrimental impact on both businesses and their employees. The argument is intensifying a broader debate about the role of taxation in sustaining economic growth and the political risks of further burdening the country’s cornerstone businesses amidst challenging economic conditions.
