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24 Dec, 2023 00:27

German economic adviser proposes tax increase to fund Ukraine

Monika Schnitzer’s call for a “Ukraine surcharge” comes as the government’s approval ratings hit record lows
German economic adviser proposes tax increase to fund Ukraine

Berlin should tax citizens’ incomes more in order to strengthen military aid to Ukraine, as support for the conflict ebbs elsewhere in the West, Monika Schnitzer, who chairs the German Council of Economic Experts (GCEE), told the Rheinische Post on Saturday.

A Ukrainian “solidarity surcharge” levied on top of the existing income tax would help meet Kiev’s urgent financial needs, she said, claiming that “special events require special measures.”

Acknowledging that the measure is not likely to be popular, Schnitzer, who leads the German economic advisory council better known as the ‘five wise men’, insisted that it is nevertheless necessary, arguing that it would be wiser to act now as “at the end of the day, our freedom is also at stake in this war.”

Schnitzer’s suggestion comes just days after Economic Minister and Vice Chancellor Robert Habeck announced Germany would have to assume more responsibility and shell out more money as Western support for Kiev has begun to wilt.

EU leaders failed to agree on a proposed €50 billion ($54 billion) financial aid package for Ukraine earlier this month during the bloc’s annual budget negotiations, and even Kiev’s boosters in Washington have been unable to push further financial support through the Republican-dominated Congress in recent months.

Berlin has already allocated €8 billion in its 2024 budget to fund the Ukrainian military and support refugees, but Chancellor Olaf Scholz promised last week that additional support would be forthcoming, “just as we planned, and, above all, for as long as necessary.”

Germany’s ruling ‘traffic light coalition’ has been polling at record lows, with 70% of Germans polled earlier this week by the Verian opinion research institute agreeing that the government is doing a ‘rather bad’ or ‘very bad’ job, and a similar survey by ARD-DeutschlandTrend earlier this month finding a whopping 82% of respondents were disappointed with its performance.

While popular dissatisfaction was already running high this summer, support for Scholz and his coalition fell off a cliff last month after the Constitutional Court ruled that an effort to repurpose €60 billion in Covid-19 relief funds for climate projects was illegal, forcing the government to freeze most of its new spending commitments.

The expert council Schnitzer leads called for raising the retirement age in accordance with life expectancy in its annual report to Scholz’s office last month, warning the economy would end the year in recession and growth would remain sluggish into 2024 or further if such entitlement reforms were not adopted immediately.