Actually, the Union and business associations often get along well with each other. But now the companies have had enough: the CDU and CSU are met with little understanding when it comes to blocking the growth package.
The Union’s ongoing blockade of the growth package for companies is fueling increasing frustration in the economy and the traffic light coalition. “German medium-sized businesses are really angry,” said the head of the Federal Association of Medium-Sized Businesses, Christoph Ahlhaus, to the German Press Agency. DIHK President Peter Adrian warned of a devastating psychological effect on the entire economy.
Economics Minister Robert Habeck called on the Union in the Bundestag: “Listen to the business associations and finally give the Growth Opportunities Act the green light.”
But it doesn’t look like that at the moment. Even after the mediation committee of the Federal Council and Bundestag, the CDU and CSU remain with their stance: They only want to agree to the package with tax relief and reductions in bureaucracy if the traffic light coalition withdraws the already decided reduction in tax relief for agricultural diesel for farmers.
Bavaria’s Prime Minister Markus Söder (CSU) announced a no vote in the Federal Council on the sidelines of his trip to Sweden. “We definitely don’t agree,” he said. “Unfortunately the traffic light has remained stubborn. There have been no real concessions.” He was particularly disappointed with the SPD prime ministers, who had very openly supported agriculture at demonstrations – “and have now simply backed out when things get serious,” as Söder said.
Accepted in committee – but no agreement
In the mediation process, a slimmed-down growth package was accepted by the traffic light majority. But the Union did not agree. Now there will be another vote in the Federal Council on March 22nd – the outcome is unclear. The calculation of the traffic light: The pressure from the economy on the Union to agree will continue to increase in the coming weeks.
And that seems to be working. The German Chamber of Commerce and Industry emphasized that frustration among companies is increasing. They now rightly doubted whether politicians had recognized the seriousness of the situation. Ahlhaus, himself a CDU politician, emphasized: “The fact that it is the Union of all people that could now overturn this law makes many people really angry.” The link to a reversal of cuts in agricultural diesel does not do justice to social responsibility. It is about the only signal of relief for the severely battered medium-sized businesses.
Industry boss Siegfried Russwurm spoke on Deutschlandfunk about a catastrophic signal effect. “The law has become a law, no: a draft law,” he said. In fact, the volume of relief in the mediation negotiations was reduced from the previously planned seven billion euros annually to 3.2 billion euros. A climate protection investment bonus, originally the core of the law, was overturned.
What’s left of the original package
Of the almost 50 tax policy measures that once existed, basically only one light version remained: tax incentives to stimulate the construction industry, better offsetting of losses, tax support for research and the reduction of bureaucratic hurdles. The states had feared that they and the municipalities would otherwise suffer excessive tax losses.
The DIHK criticized that at a good three billion euros, less than half of the relief that the federal government had originally promised was left. “That wouldn’t even offset the additional burden that the economy incurred due to the increase in electricity grid fees at the turn of the year.” Nevertheless, it is important to at least send this small positive signal.
Söder also spoke of a “little law”. “It won’t have a big impact,” said the CSU politician. Bavaria would have liked to have had a comprehensive growth opportunities law – with the abolition of the solidarity surcharge, corporate tax reform and lower energy taxes.
SPD: Union is becoming a brake on growth
Essentially, the Union’s debate is not about the growth package at all, SPD politicians criticized. “The fact that Mr. Merz and Mr. Dobrindt, on the one hand, are broadly demanding more growth for Germany, but on the other hand, the CDU and CSU are now rejecting concrete relief measures for companies and employees in the Growth Opportunities Act for unrelated reasons, cannot be surpassed in terms of political absurdity,” explained SPD parliamentary group vice-president Achim Post. The blockade was tactically motivated. The CDU and CSU would thus “become a brake on growth for our country.”
Federal Council President Manuela Schwesig also expressed her lack of understanding. You can’t make any changes to agricultural diesel in the Growth Opportunities Act. “The Union knows that – and it surprises me very much,” she said on ZDF’s “Morgenmagazin”.
Söder still stuck to the demand. For successful mediation, the dispute over agricultural diesel would have been pacified. “The traffic light ultimately refused,” he said. It is not enough, as Habeck does, to describe the difficult economic situation – and then hope that things will get better. Habeck, in turn, criticized that the Union’s proposals for more growth would result in tax losses of 45 to 50 billion euros in the budget – but the Union has no concepts for counter-financing and at the same time wants to comply with the debt brake. This is “voodoo financial policy”.
What happens next?
The traffic light coalition wants to bring the Growth Opportunities Act, which has already been passed in the Bundestag, back into parliament on Friday – and also want to change the light version, with which at least most SPD states agree. The changes also include the fact that the VAT reduction for gas does not expire until the end of March. The law passed by the Bundestag still mentioned the end of February.
On March 22nd, the growth package will be called upon again in the Federal Council, where the states will vote. It is unclear how the Union-led countries will vote. But they’re not the only ones who have concerns: SPD-led Bremen is also not enthusiastic. “Even though the federal government has moved and is now taking over most of the shortfall in tax revenue, I am sticking to my fundamental criticism,” said Mayor Andreas Bovenschulte. He rejects economic development with a watering can. “That only leads to deadweight effects.” Bremen abstained from the mediation committee.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
