From Outside Looking In (UK taxation)

Member Name: Deany

Product:	UK taxation
Date:	05/07/01 (127 review reads)
Rating:

Advantages: Germans pay high and tax high, Good public services

Disadvantages: No system is perfect

I just want to add a slightly different slant to this discussion by providing the view of an English person living abroad and paying into a different taxation system. I know it is veering away from the topic slightly, but I hope my comments will add something to the discussion.

Since January of this year I have been living and working in Heidelberg, Germany, where the taxation and benefits system is very much more oriented towards an American model than the British one (private health insurance etc.). At times the Germans seem to have got it just right, while at others I’m left scratching my head and wondering why they make things so complicated when back home in Blighty we don’t seem to have half the hassles.

The first point I want to make is that German taxes are HIGH, a lot higher than British taxes. When I first found out how much I was going to be paid over here I nearly danced down the street with joy, but then I was shown how much of that would be taken back off of me in various forms of taxation and compulsory insurance and the final figure was a lot less impressive. Not that I am complaining. The German philosophy seems to be to pay high wages (or higher than in Britain) and then tax them in an accordingly high manner. As a result the country has public transport networks the British can only dream of, clean litter-free streets, mile upon mile of well laid Autobahn and lovingly maintained historic monuments. I know it is a cliché, but you really do get what you pay for. I am quite happy paying higher taxes if it means that even in a relatively small town like Heidelberg I have the choice between bus, tram and train and I know I am not going to be knee high in rubbish every time I leave my flat.

Ever environmentally conscious, the Germans levy high taxes on pollutants and (contrary to opinions in Britain) this also means high fuel taxes. And, yes, there have been protests over here about that too, especially when the Gr
een party (which is part of the coalition government) outlined its intentions to implement large rises in fuel tax over the coming years. Again, I have no problem with this. Surely those who damage the environment should take some responsibility for their actions. If there is one thing I would like to see in the British taxation system, it is a higher tax for those polluting the environment, especially in light of what looks to be the failure of the Kyoto agreement on environmental protection.

And yet, no system is perfect. Take taxes on tobacco, for instance. A pack of 20 cigarettes over here costs DM6, which converts to about £2. Last time I was home in Britain I’m sure the price of a similar pack of cigarettes was pushing £4 – due in no small part to the level of taxation. Alcohol, especially beer, is similarly a lot cheaper over here. I suppose the British government can justify such a heavy tax on tobacco by claiming “You pay a high tax on tobacco because you are exposing yourself to a higher risk of lung cancer. In later life you will be a burden on the NHS and the extra tax will be used to pay for your care”. The German government does not have this option of justifying high taxes on tobacco and alcohol as there is no National Insurance over here, only (compulsory) private insurance with one of many health insurance companies. The health service does get some funding from the government, but the link is not as clear-cut as the system in Britain.

Another, admittedly minor, point that baffles me about the German system is the issue of the Steuerkarte or ‘Tax Card’ and the annual tax return form. In the modern world of PAYE this slip of paper is something of an anachronism. Every year the German taxpayers have to fill in a form based on their earnings which is so hideously complicated that few people can complete it without the help of a specially designed computer program. The form allows people to claim tax
back on fuel for work journeys, office materials etc. I know that such a system exists in Britain for the self-employed, but over here everyone is able to claim as they see fit, even if they work for a multinational company and have no contact with the taxation authorities for the whole rest of the year. Needless to say the system is open to abuse and I have heard tales from German colleagues of claiming tax back on foreign holidays that happened to include a (recreational) visit to a colleague in the country visited. Despite this, those that do make the effort to complete the form are often rewarded with a hundred Marks or so at the most in returned taxes. A lot of effort for a fairly minimal return.

What I suppose I wanted to point out here is that no system is perfect. Taxation and government spending should be reflections of each other – it never ceases to amaze me that many of those calling for greater spending on healthcare and education are often those also clamoring for lower taxes. I agree with the German philosophy of ‘pay high, tax high’ and also with the associated scale that increases the proportion of tax paid in accordance with wage rises. Tax should not be viewed as lost money, but rather money invested in the country to provide the essentials such as street lighting and the police force that we take for granted. Perhaps the only area of German taxation policy that I disagree with, and where I support the British policy, is the taxation of alcohol and tobacco. As with fuel tax, I believe that those people damaging the environment, burdening the health service with self-induced poor heath, or in other ways choosing a course of action that is detrimental to society as a whole should be made to account for this, and paying for their vices through taxation is one way the balance can be evened out.

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