Nabu expert on property tax: “speculating is rewarded”.

The next federal government must also reform the property tax, demand conservationists and the tenants’ association. Settlement developer Henry Wilke explains why.

"Urban sprawl in Germany must stop," says Henry Wilke Photo: dpa

site: Mr. Wilke, property tax brings in about 12.2 billion euros every year. Where do you see the problem?

Henry Wilke: The property tax is extremely unfair because it is based on standard values that date back to 1964 in the West and 1935 in the East. The Federal Fiscal Court therefore considers the tax to be unconstitutional, and the Federal Constitutional Court has announced that it will deal with the property tax this year.

The Bundesrat has already proposed a reform. Why are you not satisfied with this?

The states do not want to change the system, but only to adjust the property tax to current market values. But buildings and land would still be taxed.

What’s wrong with that?

Speculating is rewarded. Anyone who owns building land on which there is no building currently pays only low taxes. So it pays to buy building land and keep it in stock – in the hope that land prices will continue to rise. At the same time, building on existing land is penalized. Anyone who modernizes their building or expands it and creates new rental apartments will have to pay higher property taxes afterwards.

What would be the alternative?

We propose that only land be taxed. The land tax would become a so-called land value tax. Then it would no longer be worthwhile to leave fallow land undeveloped. In Germany, there are over 150,000 hectares of unused land in the cities. It would put the brakes on urban sprawl once building starts in the inner cities. The land value tax would also be fairer: The value of building land increases primarily due to public infrastructure such as roads. This non-performing profit would be specifically taxed – regardless of whether construction takes place or not.

What makes you wonder is that the Institute of the German Economy, which is close to employers, also supports your proposal. Are you trying to cut taxes by stealth?

No. The land value tax should bring in just as much as the current land tax, i.e. 12.2 billion euros. It’s just a matter of curbing speculation with fallow land. Moreover, it would also drastically reduce the administrative burden if land were taxed uniformly. After all, it would be enormously time-consuming to determine the current market value of 35 million buildings in Germany.

is a consultant for settlement development at the Nature and Biodiversity Conservation Union of Germany (Nabu).

Nevertheless, it is astonishing that neoliberals and conservationists, of all people, are pulling in the same direction.

They forget that the tenants’ association also supports our property tax reform. As Nabu, we welcome this broad alliance. We have never seen ourselves as being close to a party.

Does the property tax also play a role in the exploratory talks between the CDU/CSU and the SPD?

None of the parties made any substantive statements on property tax in their election programs. Nevertheless, there is a need for action, because the Federal Constitutional Court has called for a reform and will hear oral arguments on the property tax next Tuesday. In addition, urban sprawl in Germany urgently needs to be curbed. At the moment, 66 hectares of land are concreted over every day.