Germany's finance minister said Thursday he would cut taxes from next year after experts forecast a nearly 40-billion-euro ($45-billion) tax windfall for Europe's top economy over the next five years.
The coffers of the states, regions and municipalities can expect almost 40 billion euros more in taxes until 2019 than had been predicted until now, according to an official forecast released Thursday by an expert panel.
Finance Minister Wolfgang Schaeuble said the extra money provided room to reform the phenomenon of tax bracket creep where employees who get pay rises slip into higher tax groups, making their net pay lower than before.
"I'm going to propose resolving this problem," Schaeuble told a news conference.
The revision aims to provide around 1.5 billion euros in tax relief in 2016, he said, adding however that since inflation was low, the impact on taxpayers' wallets would also be relatively modest.
The IG BCE energy and chemicals trade union welcomed the move as a "first step towards more tax equity".
In January, the German government said that in 2014 it had managed to balance its books for the first time since 1969, a year ahead of target.
Budgetary rigour was one of the kep electoral planks which Chancellor Angela Merkel's conservatives campaigned on in 2013 elections.