Olaf Scholz’s approval rating has plummeted to a record low after his grilling at an anti-corruption probe added to widespread dissatisfaction with his response to the Ukraine war and Germany’s energy crisis.
The chancellor was roundly criticised for his apparent lapses of memory in front of investigators in Hamburg on Friday, where he faced questions over his role in a tax fraud scandal.
Commentators noted he answered 29 questions about the scandal, part of which unfolded under his watch as Hamburg mayor, by saying he could not remember.
Well, there’s that of course.
Mr Scholz then appeared before a Hamburg parliamentary committee investigating the CumEx scandal.
The scheme involved banks and investors exploiting a loophole on dividend payments that enabled them to claim multiple tax rebates and is believed to have cost European governments as much as €55 billion.
Investigators sought details of meetings he had with the founder of a Hamburg bank involved in CumEx trades.
But the Cum/Ex thing really is lovely. I can’t be bothered to look up or recall some of the details. So here’s the simple version.
Some version of dividend taxation. Perhaps certain taxpayers should be charged the tax so they could claim it back when it was charged at the level of the company, before distribution. It starts with something like that. A dividend tax that not everyone has to pay, so some get to recoup it. Because it is collected first, then recouped by the right people.
However, a flaw in the system. Who could reclaim it wasn’t properly controlled. Specifically, who actually owned the shares on the correct date wasn’t recorded properly. So, it was possible for more than one person to claim that ownership. Along the lines of settlement is T+3 (say) and if you sell on T-1 then on T+1 and T+2 then it’s possible for the seller and the buyer to both reclaim the tax payment. Again, might be details screwed up here but the general idea is correct. Not nailing down who actually owned on the correct date meant more than one could claim the rebate.
So, cart and horses gets driven through this. Which is, when you think about it, quite lovely, isn’t it? Because it’s the inaccuracy of government itself which allows it…….