Ever wondered what is Solidarity Surcharge (Solidaritätszuschlag), which is mentioned in your pay statement each month?
Fall of the Berlin Wall on 3 October 1990 symbolized unification of East and West Germany to form reunited nation of Germany. This is the day when Berlin reunited into a single city. Starting in 1991, Solidarity Surcharge or Solidaritätszuschlag was levied on tax payers to help fund public investment in the former communist east of Germany. This surcharge was introduced to cover the costs of German re-unification.
The solidarity tax surcharge was initially levied for only one year and amounted to 7.5 percent of the tax bill of wage earners and companies. It was suspended after one year but reintroduced in 1995, and has been levied ever since. It was cut from 7.5 percent to 5.5 percent in 1998. In the 24 years since the fall of the Berlin Wall, more than €1.5 trillion in public money has been channeled to rebuilding the infrastructure and economy of the east, and to pay for unemployment and welfare benefits there. In 2013, German government collected €13.6 billion via the surcharge.
For a long time now there has been a controversial discussion in Germany about ending the solidarity surcharge. It has also often been the subject of proceedings before the Federal Financial Court (Bundesfinanzhof) and the Federal Constitutional Court (Bundesverfassungsgericht), where its constitutionality was always confirmed even with regard to a permanent existence.
