Sachsen’s Grunderwerbssteuer Increase Falls Short of Revenue Expectations
A recent inquiry by the Alternative for Germany (AfD) faction in the Saxon state parliament has revealed that the increase in Grunderwerbssteuer (real estate transfer tax) in Saxony has failed to generate the anticipated revenue.
Revenue Shortfall and Impact on Homeownership
In 2023, the Grunderwerbssteuer yielded approximately €390 million, significantly lower than the projected €682 million. The tax was raised from 3.5% to 5.5% at the start of the 2023/2024 budget period.
According to AfD member of parliament Thomas Thumm, the high Grunderwerbssteuer makes homeownership virtually unaffordable for families. It also places a significant burden on the construction industry. He criticized the government’s decision to increase the tax during a construction crisis as one of its "stupidest measures."
AfD’s Call for Tax Reduction
The AfD believes that the Grunderwerbssteuer should be reduced to at least 1%. They propose temporarily suspending the tax or even abolishing it altogether.
Factors Contributing to Revenue Shortfall
Several factors may have contributed to the shortfall in Grunderwerbssteuer revenue:
- Economic slowdown: The broader economic downturn has likely impacted real estate transactions, leading to fewer taxable transfers.
- Increased construction costs: Rising construction costs make home purchases more expensive, potentially deterring buyers.
- Alternative housing options: Renters may be less likely to purchase homes due to the higher tax, opting instead for alternative housing arrangements.
Policy Implications
The underwhelming revenue performance of the Grunderwerbssteuer increase raises questions about the effectiveness of raising taxes to generate revenue. It also highlights the need to consider the broader impact of tax policy on the housing market and construction industry.
Conclusion
The increase in Grunderwerbssteuer in Saxony has not met revenue expectations and has drawn criticism from the AfD. The subsequent economic slowdown and increased construction costs have further exacerbated the revenue shortfall. The AfD proposes a significant reduction or even the abolition of the tax to alleviate its negative impact on homeownership and construction. The government’s response to the revenue shortfall and the broader implications of the tax increase will shape the future of housing affordability and economic development in Saxony.
