Germany to impose tax on the young to help the old

“We have to consider the time after 2030 when the baby boomers of the 50s and 60s are retired and costing us more in health and care costs,” said Guenter Krings, who drafted the Christian Democrat “position paper”.

Germany, Europe’s biggest economy has one of the lowest birth rates in Europe and its population shortfall has not been offset, as in Britain, by immigration or by policies to encourage large families, as in France.

The revenues raise from the new tax would not be used to fund pensions but would be used to offset a sudden explosion in social security costs as the number of people of working and taxpaying age dwindles over the next 15 years.

According to Germany’s federal statistics office, the country’s population is forecast to decline from 82 million people today to as low as 65 million by 2060.

The plans will become a battleground in German elections next year amid opposition claims that social security shortfalls have been caused by spending cuts and that the new taxes will cause resentment towards the elderly from younger taxpayers.

Franz Muentefering, a former German vice-chancellor and social democrat leader, has rejected the tax as unnecessary if social spending is maintained without further austerity cuts to existing expenditure. “Germany does not need a special tax,” he said.

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