Plans of the Federal Minister of Finance to Reduce the Effects of Bracket Creep - ZEW President Clemens Fuest: "The Announced Tax Relief Falls Short of the Mark"

With tax revenue estimates again predicting an increase in government revenues, the German Federal Minister of Finance plans to tackle the effects of "bracket creep" from 2016. The President of the Centre for European Economic Research (ZEW), Professor Clemens Fuest, comments the recently presented plans: "The announced tax relief falls short of the mark when it comes to addressing bracket creep. This issue could be addressed over the long run by implementing a "tariff on wheels", an automatic annual adjustment of tax rates that offsets the effects of inflation. The amount of this offset, however, must depend on the level of inflation, not on the current government budget."