DIHK survey: More and more municipalities are increasing trade tax

On average, German municipalities require a tax rate of 441 percent. However, the differences are growing. This puts a particular strain on some companies, warns the DIHK.

Berlin. In view of the tight financial situation in many places, more and more municipalities are increasing trade taxes and thus placing greater burden on local companies. For every municipality that lowers its business tax, there are almost 18 that raise it. This emerges from a survey published on Monday by the German Chamber of Commerce and Industry (DIHK).

Accordingly, 88 of 706 municipalities examined increased their so-called assessment rate, while only five lowered it. “This means that the trade tax is developing into a silent brake on locations,” said DIHK Managing Director Helena Melnikov - even if the majority of cities and municipalities keep their assessment rates stable.

Trade tax is one of the most important sources of income for municipalities. With the assessment rate, cities and municipalities set a multiplier that determines the actual amount of local tax burden for a company.

According to the DIHK, the population-weighted national average increases from 439 to 441 percent. The regional differences are large. The assessment rates range from 250 percent in Monheim am Rhein and Leverkusen to 580 percent in Oberhausen and Mülheim an der Ruhr.

The municipalities are under pressure: in the first half of the year, the municipalities and municipal associations again recorded a financing deficit of 20.1 billion euros. This means it remains at the record level of the same period last year. The reasons for this include rising interest costs, high personnel costs and more social spending.

“The financial problems of municipalities are real,” Melnikov said. “But they must not be passed on to local companies.” Higher trade taxes would deprive companies of funds for important investments and increase Germany's competitive disadvantage as a high-tax country.

Medium-sized companies are particularly affected, for whom the assessment rate often decides “whether the next machine can be purchased or the next training position can be created”. The DIHK therefore called for structural reforms in which the federal and state governments equip the municipalities permanently and appropriately for their tasks.

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