Germany proposes income smoothing to reduce farmers' taxes

"I want to integrate income smoothing into the 2024 Annual Tax Act," Lindner said. German farmers took to the streets in tractors in December in protest at the cut to diesel subsidies as part of a government package of austerity measures.

German Finance Minister Christian Lindner wants to help farmers by introducing income smoothing to minimise their taxes, he said in Berlin on Wednesday, after protests over a cut to agricultural diesel subsidies. "Income smoothing means that instead of using one financial year for tax purposes, several years are used," Lindner said at a press conference. This would allow farmers to distribute earnings between different years to reduce the tax burden.

Lindner justified the idea arguing that agricultural yields fluctuate greatly and are therefore difficult to plan. "I want to integrate income smoothing into the 2024 Annual Tax Act," Lindner said.

German farmers took to the streets in tractors in December in protest at the cut to diesel subsidies as part of a government package of austerity measures. Farmers across Europe have staged weeks of angry protests this year at issues ranging from European Union environmental policies to what they say is unfair competition from abroad.

Germany's Bundesrat is set to approve the Growth Opportunities Act, a package offering tax relief amounting to 3.2 billion euros ($3.47 billion) for small and medium-sized companies, on Friday. The German government's Growth Opportunities Act, which aims to attract new investment amid weak foreign demand and high interest rates, passed the lower house of parliament in November but then faced opposition in the Bundesrat, the legislative body that represents the 16 German states at the federal level.

The conservatives of the CDU/CSU made approval conditional on the government reversing its decision on agricultural diesel. As the government said this was not an option, it is making other concessions to the agricultural sector, such as income smoothing.

"We are in good talks," said Lindner, referring to the farmers' representatives. ($1 = 0.9223 euros)