BERLIN — German film funds were granted an extended lease on life Thursday after German Chancellor Gerhard Schroeder’s plan to snuff out tax-haven film funds was shelved indefinitely.
Move followed a failure by Schroeder’s ruling SPD-Green coalition and opposition conservatives to agree on the draft of a tax reform bill.
The plan to shut down film funds and other tax-saving investment vehicles was part of a wide-ranging reform package introduced in May to lower corporate tax in an effort to kickstart a sluggish economy. By gutting tax funds, Schroeder had hoped to partially finance reductions in corporate tax from 25% to 19%.
With federal elections planned for September and the SPD coalition’s prospects of winning re-election quickly diminishing, however, Schroeder has become a lame-duck chancellor.
The bill was set to be reviewed by Parliament on Friday, but it will have to wait until after the election. If an all-new conservative government is ushered into power, it’s most likely the entire draft will be scrapped in favor of a new tax plan. Yet conservatives appear equally intent on terminating the film funds.
The opposition Christian Democratic Union has said it opposes the government’s plan to offset the cuts, which includes setting minimum taxation rules across the board.
The conservatives are calling for broader tax cuts, but similarly offset by the abolition of tax breaks on private investment in film, shipbuilding and real estate funds.