Taxes: types and principles

In short: Taxes are payments to the state without a direct return. They finance schools, roads, police and social benefits.

In more detail: A distinction is made between direct taxes (paid on income or profit) and indirect taxes (included in the price, such as VAT).

In detail

• Income tax: Progressive, i.e. higher incomes are taxed at a higher percentage (steuerklassen-und-lohnsteuer).
• VAT: 19 % or 7 % in the price (umsatzsteuer-steuersätze-und-grundbegriffe).
• Corporation tax: For corporations.
• Excise duties: Energy, tobacco, alcohol tax.
• Property tax, trade tax: Important municipal taxes (gewerbesteuer-und-freibetrag).
• Principles: Ability to pay (those with more pay more), equal treatment, clarity.
• Steering: Taxes can steer behaviour (e.g. a CO₂ price).