Germany's Solidarity Surcharge: A Tax Legacy from Reunification

Germany's Constitutional Court has upheld the 'solidarity surcharge,' a tax introduced post-reunification to address economic disparities between East and West. Although controversially narrowed, the tax raised 12.6 billion euros last year. Critics argue it violates equality principles since most taxpayers are now exempt. The Free Democrats say the associated pact expired in 2019.

Germany's Constitutional Court has affirmed the continuation of the 'solidarity surcharge,' a tax initially implemented in the 1990s to bridge economic gaps between the reunified East and West Germany.

The tax, which adds 5.5% to income and corporation tax, remains contentious among economically liberal lawmakers, despite contributing 12.6 billion euros to the state last year. This legacy of reunification, though in a reduced form, has sparked anger among certain factions.

Critics, including six plaintiffs from the Free Democrats, argue that the tax breaches constitutional rights since its associated 'solidarity pact' expired in 2019. They also protest that since 2021, around 90% of taxpayers are exempt, which they claim undermines the principle of equal treatment.

(With inputs from agencies.)