Taxes: Bundestag approves package to stimulate the economy

Taxes: Bundestag approves package to stimulate the economy

The German economy is weakening. The federal government wants to change that with the Growth Opportunities Act. However, the opposition doubts that the package of measures will achieve this.

The Bundestag has approved a package of measures to stimulate the sluggish German economy. The so-called Growth Opportunities Act of the Traffic Light Coalition provides tax relief for companies until 2028 and an acceleration of approval processes. The relief should amount to seven billion euros annually.

The law was approved with the votes of the traffic light factions SPD, Greens and FDP. The opposition from the CDU/CSU, the Left Party and the AfD voted unanimously against it because they consider the measures to be largely ineffective.

The key point is a bonus for investments in climate protection. 15 percent of companies’ expenses for energy efficiency measures should be subsidized as direct financial support. The law also includes tax incentives to stimulate struggling housing construction. Additional tax incentives for more research are also planned.

The law now has to be approved by the Federal Council. However, it is met with clear criticism from the federal states. They complain that they and the municipalities have to bear two-thirds of the tax relief. The law is therefore likely to go to the mediation committee of the Bundestag and Bundesrat.

A decline in economic output of up to 0.6 percent is expected

Germany is in a recession. The federal government and the leading economic research institutes expect economic output to decline by 0.4 to 0.6 percent this year. The Advisory Council for the Assessment of Overall Economic Development assumes that things will only slowly improve again in the coming year.

In the debate, SPD financial politician Michael Schrodi emphasized: “With the global minimum tax, with the Future Financing Act and now with the Growth Opportunities Act, we have set the right course for growth, for prosperity, for social justice.” The law will “significantly strengthen the competitiveness of Germany as a business location,” assured his parliamentary group colleague Frauke Heiligenstadt. It sets important priorities for investment impulses, said the Green Party’s financial policy spokeswoman, Katharina Beck. The FDP financial politician Maximilian Mordhorst said: “I think we are passing a really good law here today.”

However, the opposition denied this. The federal government should now actually stimulate investment if it wants to get the economy going, explained the deputy chairman of the CDU/CSU parliamentary group, Mathias Middelberg. “This law makes at best a minimal, micro-scale contribution to this.” The CDU politician referred to an analysis by the German Economic Institute, according to which annual growth would increase by just 0.05 percent as a result of the Growth Opportunities Act.

The AfD politician Kay Gottschalk therefore spoke of a “missed opportunities law” that was not worth the paper it was written on. The left-wing financial politician Christian Görke saw “a few sensible regulations,” as he said. “But overall, your law is an ill-conceived, inefficient and ineffective hodgepodge of different measures.”

Source: Stern

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