What is solidarity tax?

solidarity tax is usually collected by the government to help to provide funds for projects and initiatives aimed at unifying the public around one or more specific goals. The tax is most often calculated as a percentage of total income and is also tax on personal or organizational income. In some cases, solidarity tax is calculated according to the thresholds of personal and organizational income, but in others it could be a flat percentage or rate. Such taxes are usually controversial with the public, because the tax is often collected in an effort to create funds either to compensate for a financial crisis or to finance projects that do not have another realistic alternative that does not have to obtain full public support. Over the years, many countries have introduced or considered such a tax to respond to a diverse range of situations, usually to horrify the public.

Germany is often quotedNation for the use of solidarity tax. In 1991, the government needed to create a fund with the unification of eastern and western Germany that could speed up unification and provide capital for the newly integrated administration. The selected solution was to collect solidarity tax with a flat rate of 7.5%, regardless of the level of income. While it first introduced itself to the public as a short -term measure, the tax was removed after a year, but then it was collected in 1995 and dropped to 5.5%in 1998, continued until 2011 and made legal calls on the basis of the Constitution. With legal challenges, which still have to solve the constitutional base of tax, it should remain in the books until 2019.

Similarly, other nations have either introduced or considered collecting tax on solidarity to deal with fears in social functions. In 2011, some countries falling under the umbrella of the European Union considered such a tax as an opportunity for Nevini to fall from under the paralyzing debt that saddled their economies. Greece revealed the tax in its world -class proposalBank and IMF concerning austerity measures and proposed a solidarity tax, which it subsequently collected, requiring Greek taxpayers to get up to 5% of their income, depending on their annual salary. Surprisingly, this resulted in the riots in the streets, but the tax prevailed.

Italy also considered the possibility to carry out solidarity tax in an effort to get its debt suffering under control in 2011. In this case, however, it was focused on tax in this case rather than all taxpayers in Italy. However, after considering the overall impact of debt control, Italy changed the course and removed the potential tax on its proposals for austerity measures to the World Bank and the IMF.