Taxes: Debate about relief for companies – Scholz reserved

Chancellor Olaf Scholz has expressed reservations about the debate about tax relief for companies initiated by his ministers Robert Habeck (Greens) and Christian Lindner (FDP). 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.”

Economics Minister Habeck 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. Finance Minister Lindner rejects a special fund, saying it would mean new debt. On the other hand, he brought up the abolition of the solidarity surcharge for companies. This proposal was again rejected by the chairmen of the SPD and the Greens.

Lindner wants to work with Habeck to make German companies more competitive. 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.

Complete abolition of solos is controversial

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 provided the federal government with income of around twelve billion euros.

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 head of the German Economic Institute (IW), Michael Hüther, welcomed the FDP leader’s initiative. “The abolition of the residual solidarity, which is basically a disguised corporate tax, is long overdue,” said Hüther to the “Rheinische Post” (Monday/Print Tuesday). Germany has long been a high-tax country. Hüther also called for a reform of corporate tax 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. Regarding his initiative in the Bundestag, the Vice Chancellor said: “This is an invitation” to talk about easing the burden on the economy.

The deputy SPD parliamentary group leader Verena Hubertz brought up a sovereign wealth fund in order to be able to invest more. She said on Monday on Deutschlandfunk that she believes it is important to examine new options that lie between increasing taxes and incurring debt. “And that’s why we as the SPD – both as a parliamentary group and as a party – have spoken out in favor of a sovereign wealth fund, i.e. a so-called Germany fund, which can also raise massive amounts of private capital through a capital collection point.” This means investments can be made in the infrastructure.

CSU calls for “real relief for the economy”

CSU regional group leader Alexander Dobrindt called on the government to act: “There needs to be real relief for the economy through lower corporate taxes, competitive energy prices and less bureaucracy,” said Dobrindt on Monday. The chairwoman of the SME and Economic Union (MIT), Gitta Connemann, told Welt-TV: “Once again the impression of the ongoing dispute in the traffic lights is increasing. The economics minister doesn’t speak to the finance minister, the chancellor has disappeared anyway.” The CDU member of the Bundestag warned: “The companies are up to their necks in water – the companies don’t have another two years.”