Now, here is the news for someone who thinks that India has a very high tax structure. The German cabinet passed a proposal that will increase the income tax rates to 45 % and also drawback the tax benefits.

According to the Government, the plan is part of the effort by Chancellor Angela Merkel”s left-right coalition government to trim Germany”s budget deficit. The coalition partners last year agreed in principle to impose the so- called “rich tax” on high-income people, a demand of Gerhard Schröder”s center-left Social Democrats.

Further to this, is a little startling fact for the people who feel that the indirect tax is high in our own motherland. The VALUE-ADDED TAX (VAT) shall also increase by another 3 percent, making it 19 percent fromt he existing 16 percent in Germany.

The Spokesperson said that, the new top income tax rate of 45 percent would apply to people with a taxable income of at least €250,000, or $320,000, or couples with an income of more than €500,000. The current top rate is 42 percent

Now the way the tax rates are increasing throughout the world, its creating a difficult situation for the people at large. It is forcing people to part away with almost half of their hard earned income. Such high tax structures result in evasion and hiding of income leading to a large chunk of unaccounted black money. I personally feel that if the tax structures are flexible and tax payer freindly, more and more people would like to deposit the tax and hence result in larger collection of tax.

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