What is the state tax levy

taxes and finances

Constanze Hacke

Constanze Hacke works in Cologne as a business journalist, lecturer and presenter for radio, print media, specialist publishers, public clients and companies. For more than a decade it has been under the motto "Economy - made easy!" successfully self-employed and has made a name for herself as an expert, especially in the tax field. Her work also focuses on the areas of law, finance, economic policy, medium-sized businesses and management. As a specialist journalist, she sees her task in understanding and explaining complex relationships and dry topics as well as making them understandable and vivid. At the end of 2011 her book "Self-employed and then? How freelancers become successful in the long term" was published by Wiley-VCH Verlag. In spring 2013 the guide "Taxes made easy. First aid for the self-employed" will be published by the same publisher.
Contact: www.c-hacke.de

Taxes are the most important source of income for the state. The federal, state and local governments decide where the tax revenue goes in order to be able to fulfill their tasks. In doing so, they try to distribute not only the tax money but also the tax burden as fairly as possible.

Forms for preparing the tax return (& copy AP)


Taxes are there for everyone. And everyone pays taxes, sometimes without even realizing it. If you drink a cappuccino in a café, you will only see the VAT on the bill later. The coffee tax, which is included in the price, goes unnoticed from the coffee drinker's wallet to the treasury's till. For a full tank of petrol, for example, the state collects not only the omnipresent value-added tax on every liter from the pump, but also energy tax - and tobacco tax on every pack of cigarettes in addition to sales tax. But what do we get for these tax payments? And why do we have to pay taxes at all?

Taxes are the basis of a political system; they provide the state with money so that it can carry out its tasks. So taxes are above all one thing: revenue for the state. This income finances the services that we expect from a community: education, public infrastructure, health care, social security or internal and external security are among these areas. Schools, streets, hospitals and kindergartens have to be paid for, as do environmental protection tasks, the courts or the police. Taxes are also used to guide behavior or to redistribute money with a view to social justice. The tobacco tax is an example of the state trying to curb smoking through high taxes. And with the linear progressive income tax rate, the state wants to ensure that people with a high income pay more taxes than people with little money.

Taxes are therefore levies that all citizens have to pay. Of course, the federal, state and local governments can also incur debts and take out loans. But the main source of income for the state is taxes, without which it could not shape the community. In 2011, tax revenues amounted to around 527.3 billion euros.

Progressive taxation
Progressive tariff course

What are taxes actually?

In the law, which is the basis for all taxes in Germany - in the so-called tax code (AO) - it is precisely defined what taxes are: “Taxes are cash payments that do not represent a consideration for a special service and are provided by public law Commonwealth is imposed on everyone to generate income for whom the facts apply to which the law attaches the obligation to perform; generating income can be a secondary purpose. ”(Section 3 (1) AO).

In other words: taxes are compulsory levies that the federal, state and local governments can impose on citizens. Taxes can also - at least nowadays - only be raised in euros and cents; a farmer can therefore not meet his tax liability with a hundredweight of wheat. In addition, you pay taxes without being able to claim a service in return for the money. So whoever pays the gasoline bill at the toll station's cash register and thus pays the energy tax at the same time cannot demand in return that the potholes on the road be repaired. Conversely, the following applies: Citizens cannot refuse to pay taxes because they do not agree with a certain state expense - for example, for the expansion of an expressway near a nature reserve.

Taxes must also not be earmarked: each tax euro flows into the total amount of the household, regardless of the type of tax, from which all expenses are financed. Because all income in the budget must be used to finance all expenses. So there is no separate road construction budget that is fed exclusively from the revenue from the vehicle tax. And assume that the income from the vehicle tax is actually used exclusively for road construction: If the vehicle tax income then increased, more roads would have to be built just to get rid of the "excess" money. Conversely, those who do not have to pay taxes - as it is called in official German - do not fulfill a certain “offense”. That means: if you don't own a car, you don't have to pay any road tax.

Very important, even if it is not expressly stated in the law: Taxes must not be levied arbitrarily. The fact that decisions are not made arbitrarily, of course, applies not only to tax policy, but also to the democratic constitutional state in general: the separation of powers between parliament, government and the independent judiciary protects the population from the state abusing its power. Discriminatory treatment, as in the time of National Socialism, for example through the "Reich Flight Tax" for Jewish citizens, is now ruled out.

Delimitation of taxes from fees and contributions
In addition to taxes, the state can levy other levies. These differ from taxes mainly in that there is a specific consideration for the money. For example, you pay the fees directly for a service you have used, for example if you want to extend a passport at the residents' registration office or register your car at the road traffic office. In these cases, administration fees are payable. There are also usage fees: These include, for example, admission to the municipal swimming pool or the annual bill for garbage collection. The tax authorities still have a third possibility of generating income, namely through contributions: Here, costs for services that benefit a certain population group are passed on to this entire group. The best-known example of this are the contributions to our social security, such as health and long-term care insurance. Another example: All homeowners in a new development area have to contribute through resident contributions to ensure that the area is developed with streets, canals and lines.

Who decides on taxes?

Germany is a federal state; The Basic Law assigns certain tasks to the federal, state and municipalities: foreign policy or the armed forces are, for example, federal matters, the states have to take care of the police, schools and universities, the municipalities, for example, about kindergartens or garbage collection. Both the federal government, the federal states and the municipalities need money for these tasks. Therefore, not all taxes simply flow into a single national budget.

The financial constitution, i.e. all rules and regulations that affect public finance, are laid down in Articles 104a to 108 of the Basic Law. It is specified here
  • how the expenditure burdens are distributed,
  • who makes the tax laws,
  • who receives which tax revenue,
  • how the financial relations between the federal levels are structured and
  • what are the responsibilities of the administration and the judiciary in relation to taxes
Article 105 of the Basic Law regulates who has to decide on the collection of taxes. This defines the so-called legislative competence. Whoever owns it can introduce a new tax, modify an existing tax or even abolish it. The federal government has exclusive legislative competence for many types of tax, such as vehicle tax, tobacco tax or the solidarity surcharge. In some cases the European Union has a say, for example on agricultural taxes. The federal states have the competence to enact laws on the second home tax or the entertainment tax, for example. And the municipalities have the right to set the assessment rates for property and trade tax.

In addition to the exclusive legislative competence, there is also the competing legislative competence between the federal government and the federal states: The federal government always has priority when it is entitled to all or part of the tax revenue or when there is a need for a federal law for other reasons. The states can enact tax laws if the federal government does not make use of its legislative right. In addition, the federal states participate in all laws passed by the Bundestag - with different consequences: In the case of the so-called objection laws, the Bundesrat can object to the law submitted. However, Parliament can reject this objection. It is different with the consent laws. The state chamber must expressly agree to this. If it doesn't, the law has failed for the time being; an agreement is then only possible through the mediation committee.

Source text

Article 105

Distribution of legislative competence in taxation

(1) The Federation has exclusive legislation on customs duties and financial monopolies.

(2) The Federation has competing legislation on other taxes if it is entitled to the revenue from these taxes in whole or in part or if the requirements of Article 72 (2) are met.

(2a) The states have the power to legislate on local consumption and expense taxes as long as and to the extent that they are not similar to taxes regulated by federal law. You have the authority to determine the tax rate for real estate transfer tax.

(3) Federal laws on taxes, the revenue of which flows in whole or in part to the federal states or the municipalities (municipal associations), require the approval of the Bundesrat.