German Finance Minister Wolfgang Schaeuble said he would be ready to cut income taxes by adjusting thresholds for inflation if the upper house of parliament agrees to scrap a practice that generates billions of euros in annual revenues.
Thresholds in Germany's progressive tax system are not automatically adjusted for such factors, which means that an individual's pay rise can trigger a net pay cut. The taxpayers' association has estimated the lack of adjustment enables the government to raise between 2 billion euros and 6 billion euros ($2.5 billion to $7.5 billion) of extra revenue a year.
"If the states agree, we'll eliminate 'cold progression'," Schaeuble told Bild newspaper in an interview to appear on Saturday.
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