Germany seeks to appease farmers with tax relief plan

Credit: REUTERS/Heiko Becker

By Maria Martinez

BERLIN, March 20 (Reuters) - Germany's finance minister wants to let farmers spread their earnings over several financial years to help reduce their taxes, he said on Wednesday, as governments across Europe look for ways to stem a wave of protests in the agricultural sector.

Christian Lindner said he wanted to include so-called "income smoothing" in the 2024 Annual Tax Act.

"Income smoothing means that instead of using one financial year for tax purposes, several years are used," he told a press conference in Berlin.

He justified the idea by saying that agricultural yields fluctuate greatly and are therefore difficult to plan for.

The finance ministry estimates income smoothing would reduce the tax burden for farmers by 150 million euros ($163 million) over the next three years.

German farmers took to the streets in December to protest against a cut to diesel subsidies, part of a wave of action across Europe over issues ranging from environmental policies to what they say is unfair competition from abroad.

"We are united by the goal of relieving the burden on agriculture now and at the same time positioning it well for the future with all the challenges it faces," German Agriculture Minister Cem Oezdemir said on Wednesday.

Apart from income tax relief, Oezdemir said the government was working on measures to strengthen farmers position in the food chain.

The Bundesrat, which represents Germany's 16 states at the federal level, is set to approve the Growth Opportunities Act, a package offering 3.2 billion euros of tax relief for small and medium-sized companies, on Friday.

The act, which aims to attract new investment amid weak foreign demand and high interest rates, passed the lower house in November but then faced opposition in the Bundesrat.

The opposition CDU/CSU conservatives 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, such as income smoothing.

"We are in good talks," said Lindner, referring to farmers' representatives. Oezdemir spoke on Wednesday of "very good, constructive and confidential talks" with the sector.

The German farmers' association DBV reported a positive start to the talks, but added there was "still a considerable need for improvement" on the proposed measures.

($1 = 0.9223 euros)

(Reporting by Christian Kraemer, Maria Martinez and Holger Hansen Editing by Mark Potter)

((maria.martinez@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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