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State financial equalization: Rich municipalities should give more


DIW boss Fratzscher calls for a reorganization of the federal-state financial equalization. The chronically clammy Berlin will certainly support the proposal.

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Power line: Rich federal states should contribute more to the energy transitionEnergiewende

Photo: Christoph Hardt / Panama Pictures / IMAGO

The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, has spoken out in favor of comprehensive aid in view of the poor financial situation of the municipalities in Germany.

"The municipalities need significantly more direct aid from the federal and state governments in order to be able to cope with additional expenditure in this crisis, especially for social affairs and infrastructure," Fratzscher told the "Handelsblatt".

In addition, a "complete debt relief for all municipalities" must be implemented urgently by the federal and state governments.

Fratzscher also considers a reorganization of the federal-state financial equalization to be necessary.

A much greater redistribution from financially strong federal states and municipalities to financially weak municipalities is necessary in order to ensure equivalent living conditions in Germany, but also to involve the financially strong federal states of southern Germany more in the energy transition and the expansion of renewable energies in the financially weaker municipalities.

"Because it is above all the financially strong municipalities that often benefit particularly strongly from the expansion of renewable energies due to their high proportion of energy-intensive industries," said the DIW boss.

"And it is often the financially weaker municipalities that shoulder the greatest expansion of renewable energies and the associated burdens without being adequately compensated for them."

Fratzscher should definitely get applause for his proposal from Berlin.

There, the Governing Mayor Franziska Giffey recently approved additional social benefits amounting to three billion euros, which are also indirectly co-financed by the richer federal states.

The SPD politician had countered the criticism of the relief package with the saying: "Sounds like envy of Berlin".

Of all the German federal states, the federal capital receives the most money from the state financial equalization system.


Source: spiegel

All business articles on 2022-12-14

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