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Moritz Kraemer, Chief Economist at Landesbank Baden-Württemberg (LBBW): »Something has to change here«
PHOTO: PAULO WHITAKER / REUTERS
According to Moritz Kraemer, chief economist at Landesbank Baden-Württemberg (LBBW), the federal government must increase taxes.
The reason: the enormous challenges caused by the Ukraine war and climate change.
"I advocate the reintroduction of the solidarity surcharge," Kraemer told the German Press Agency (dpa) in Stuttgart.
»The turning point does not come for free.«
Most recently, after German reunification, the country had such "Herculean tasks" ahead of it.
Politicians must push ahead with the energy transition in order to become independent of Russian gas.
One must expect that the economic crisis will worsen as a result of the sanctions against Russia, which could necessitate further aid packages for companies, employees and consumers, explained Kraemer.
In addition to higher spending on defense, there is no way around putting more money into roads, railroads and schools.
'There are so many necessities, all at once.
They all came about because our generation did not act properly and delayed finding answers to many of the social challenges.«
Social graduation of the new Solis
The solos must be socially staggered, said Kraemer.
"We mustn't dig into the pockets of the small earners, who have lost purchasing power anyway."
The tax increase must primarily hit richer people.
»That must then also be borne by those who have benefited from all the rising real estate values and stocks.
These are not the average earners,” said the chief economist at Germany’s largest state bank.
The Baden-Württemberg Finance Minister Danyal Bayaz (Greens) is also of the opinion that the decision by the traffic light coalition not to raise taxes in the legislature can hardly be upheld.
"Why should primarily future generations bear debt for the pandemic and the Bundeswehr?" An honest debate about fair tax policy is necessary, he tweeted on Sunday.
Kraemer considers such a tax increase to be the best way, which will not be at the expense of future generations.
In addition, the tax rate in Germany is still very moderate in an international comparison.
The federal government could theoretically cover the necessary expenses with new loans, since it is solvent and can borrow at very low interest rates.
But: "The debt brake is in the Basic Law, we can't do anything about it." There is also no majority for changing it.
Cutting expenses on a large scale also makes no sense.
"Do we want to cut social benefits now that inflation is at seven percent?" There shouldn't be any savings either when investing in infrastructure.
Kraemer said he was aware that it was very important to the FDP to rule out a tax increase in the traffic light coalition agreement.
However, the chief economist is certain that things cannot stay that way.
New loans, higher taxes and cuts: "All three together just doesn't work.
Something must be moving here.«
The solidarity surcharge, or soli for short, has been levied since 1995 to cover the costs of German unity.
Most recently, it was 5.5 percent of income and corporation tax.
Last year, the surcharge was abolished for around 90 percent of citizens.
muk/dpa
