Special funds, solidarity surcharge, dynamization package, sovereign wealth fund – ideas for relieving the burden on companies are bubbling up in the traffic lights. There is no concept yet.
Federal Finance Minister Christian Lindner wants to work together with Economics Minister Robert Habeck to make German companies more competitive.
Lindner once again rejected his cabinet colleague’s suggestion of setting up a special fund worth billions to relieve the burden on companies. In the ARD “Report from Berlin” the FDP politician said on Sunday evening: “Because of me, this speech in the Bundestag didn’t have to take place. We could have discussed it differently with each other. But now this debate is here. And now we’re doing something Something constructive out of it.”
If the economics and finance ministers thought that something had to change in economic policy, “then that must now have concrete consequences for the federal government and for the coalition,” Lindner made clear. Government spokesman Steffen Hebestreit said in Berlin that Chancellor Olaf Scholz (SPD) was taking careful note of the requests to speak. The government is striving to have a competitive economy in Germany and has launched a number of initiatives to achieve this.
Economics Minister Habeck (Greens) brought a special fund into play in the Bundestag on Thursday in order to solve structural problems. For example, he mentioned the possibility of creating tax credits and tax depreciation options. Lindner rejected a special fund, saying it would mean new debts.
Scholz is cautious about tax cuts for companies
Chancellor Olaf Scholz has expressed reservations about the debate initiated by his ministers about tax relief for companies. In Berlin, the SPD politician referred to the already planned Growth Opportunities Act, which is intended to promote the German economy. This is a “very good project” for which a mediation process is currently underway between the Bundestag and the Bundesrat.
“I hope that this very concrete and very practical project, which is intended to make it easier for companies to invest, will become something even with the approval of the states,” said Scholz. “That’s what you should focus on. It’s practical, tangible and works quickly.”
Complete abolition of solos is controversial
Rather, the finance minister spoke of a “dynamization package” that encompasses the areas of the labor market, climate protection, energy prices, bureaucracy and taxes. If you really want to do something about taxes, the easiest and quickest way would be to abolish the solidarity surcharge for companies. This would also have the advantage that states and municipalities would not be burdened. But you then have to talk to each other about counter-financing.
The Soli was introduced in 1991 – a year after German unification – and was intended to help finance economic development in the new federal states. It was levied until 2020 as an additional levy of 5.5 percent on income and corporation tax in order to finance the burden of reunification. Since 2021, only top earners and corporations have to pay it. Last year, the solidarity generated income of around twelve billion euros for the federal government.
Habeck was skeptical about the solidarity proposal. Canceling the solidarity entirely would increase the budget gap, said the Vice Chancellor on the ARD program “Caren Miosga”. The two chairmen of the SPD and the Greens, Saskia Esken and Ricarda Lang, also rejected Lindner’s proposal.
The head of the German Economic Institute (IW), Michael Hüther, welcomed Lindner’s solidarity initiative. “The abolition of the residual solidarity, which is essentially a disguised corporate tax, is long overdue,” said Hüther to the “Rheinische Post”. Germany has long been a high-tax country. Hüther also called for corporate tax reform in order to achieve an internationally competitive tax level. “A gradual reduction in taxes by, for example, five percentage points over five years would be possible even if the debt brake is adhered to and would significantly increase private investment,” suggested the IW boss.
“Invitation” to a debate about relief for companies
Habeck reiterated his analysis that the German economy has a weakness in investment and that the tax burden for many companies is higher than in international competition. The Green politician referred to the government’s Growth Opportunities Act. The Federal Council has not yet overcome this hurdle. There are concerns in the countries. Habeck spoke of a relief volume of eight billion euros and the danger that there would only be “homeopathic” relief because of the dispute with the federal states. All the experts said that was far too little. Regarding his initiative in the Bundestag, the Vice Chancellor said: “This is an invitation” to talk about easing the burden on the economy.
