Why Tübingen Residents Must Pay More Taxes: Palmer's Retroactive Tax Hike on Properties and Businesses
Retroactive Billing by Palmer Targets Tübingen Clients - Palmer is urging the Tubing community to return to the cash register or point of sale.
Mayor Boris Palmer of Tübingen city makes an unexpected move, boosting property and business tax rates retroactively since January 1, 2025. To close a staggering €7.6 million budget gap, locals face significant additional taxes. Tübingen now follows Baden-Baden's footsteps as the second city in Baden-Württemberg to adopt such retroactive increases.
Facing No Other Option
Deciding the tax rate for municipalities lies with the state, and the new business tax rate escalates from 390% to 405%, while property tax B jumps from 270% to 350%. Property tax C, implemented this year on undeveloped buildable sites, remains untouched at 540%. Palmer acknowledges the upset felt by property owners dealing with frequent tax hikes. He, however, points to Germany's struggling municipalities, arguing that there was no alternative path to avoid financial chaos.
Tübingen’s Dramatic Fiscal Woes
Municipalities can only revisit their tax rates until June 30th – for the year 2025 – on a retroactive basis. The revenue-neutral adjustment is key to maintaining the same income level as before the tax rate changes. Tübingen's decision to raise the property tax B rate from the midpoint of the public range (257-284%) to 350% was fueled by inaccurate tax transparency data. Initially planning to go to 360%, they settled on 350%. According to the Württemberg Ministry of Finance, alterations in land value evaluations and ongoing legal proceedings have affected the adjustment of tax rates for several municipalities.
The twisted road of Tübingen's rising property tax dates back to 2025, when a new nationwide property tax calculation method was ushered in by the Federal Constitutional Court. The shift attempted to modernize the antiquated method of valuing properties. In Baden-Württemberg, the revised method — the land value model — uses acreage instead of assessing property value.
Consequences and Criticisms of the New Tax Rates
The Federation of Taxpayers in Baden-Württemberg's state chairman, Eike Möller, criticizes the city for the negative consequences the tax hike imposes on both citizens and businesses. He emphasizes the increased financial burden for local residents and businesses, further questioning the revenue-neutral nature of the property tax reform in Tübingen.
To lessen the impact of the rising taxes, the Tübingen community could consider investing in community aid programs, such as vocational training, which could potentially increase local employment and stimulate the business sector. This strategy might alleviate some of the financial burden on both residents and businesses.
The increased taxes on businesses present an opportunity for employers to invest in vocational training programs, thus improving their workforce's skill sets and enhancing the competitive edge of their businesses in the long run. By doing so, they not only contribute to the local economy but also facilitate the development of a self-sustaining, skilled workforce in Tübingen.
