The Limited Times

Now you can see non-English news...

Ifo boss warns future federal government of tax increase: burden higher today than when Merkel started

2021-09-29T23:37:18.964Z


Ifo President Prof. Clemens Fuest has urged the future federal government to exercise restraint on tax issues. Possible tax increases are "counterproductive", says Fuest in an interview with Merkur.de.


Ifo President Prof. Clemens Fuest has urged the future federal government to exercise restraint on tax issues.

Possible tax increases are "counterproductive", says Fuest in an interview with Merkur.de.

Munich - The President of the Munich Ifo Institute, Prof. Clemens Fuest, has called on the future federal government to take a closer look at the framework conditions for the economy. It is "of central importance that Germany overcomes the corona crisis and returns to economic growth," said Fuest on Monday in an interview with

Merkur.de.

These included accelerated government investments in digital infrastructure and improved depreciation conditions for private investments.

At the same time, Fuest warned the future federal government against further increasing the tax burden.

Tax increases are "counterproductive in the current, fragile economic situation," said the Ifo boss.

The tax rate is now "significantly higher than at the beginning of Angela Merkel's reign *".

It is therefore "urgent" to examine whether the existing government spending is really all necessary.

In the medium term there is “considerable potential for savings”.

Prof. Fuest, two possible scenarios are emerging for the future federal government after the federal election: a traffic light consisting of the SPD, FDP and the Greens or a Jamaica coalition of the Union, the Greens and the FDP.

Red-red-green, on the other hand, is off the table.

German companies can live well with this intermediate result, right?

It always depends on the coalition agreement that comes out, but according to the programs of the parties involved, Red-Red-Green would have relied heavily on redistribution and would have accepted losses in terms of growth and prosperity in return.

It is obvious that companies want something different, but what is more important is that their employees did not want that either, as they clearly indicated at the ballot box.

Critics accuse the outgoing grand coalition of Chancellor Angela Merkel of failing to tackle many conflicting issues such as the future of pensions for fear of polls and election defeats.

That is why there were so many unsolved problems and decisions waiting for the future federal government as there had not been for many years.

Do you share this attitude?

Politicians cannot be blamed for shying away from reforms that lead to electoral defeats.

But you can win support for necessary reforms if you design and explain them correctly.

There was a lack of courage and creativity here, no question about it.

Where do you see the greatest need for action in economic policy?

It is of central importance that Germany overcomes the corona crisis and returns to economic growth.

But that should be sustainable and inclusive.

This includes a resolute and intelligent climate policy, this includes improving tax conditions for private investments, accelerating public investments in digital infrastructures, among other things, and social support where, for example, rising CO2 prices have undesirable distributional effects.

Ifo boss Fuest: Possible tax increases counterproductive

Climate protection emerged as a central issue on the evening of the election.

Here, the Greens, as the majority buyers, could tip the scales.

How great is the danger that there will be a race for the favor of the Greens when it comes to climate protection, in which the competitiveness of the German economy may fall by the wayside?

Climate protection and competitiveness do not have to be mutually exclusive.

It is precisely a matter of reconciling the two through an intelligent climate policy.

It's not easy, but it can be done.

To this end, the CO2 price should be the focus of climate policy.

Detailed control through rules and regulations, such as the obligation to install solar cells on all roofs, even if the houses are in the shade, should be avoided.

Public debt has recently risen significantly again due to the corona pandemic.

How much financial leeway does the next federal government have and will it work without tax increases?

Tax increases are counterproductive in the current fragile economic climate.

The tax rate is significantly higher today than at the beginning of Angela Merkel's reign.

There is an urgent need to examine whether all existing government spending is really necessary.

There is considerable potential for savings in the medium term.

In an international comparison, the German corporate tax rates are already among the highest.

The burdens on companies are currently growing sharply due to higher energy prices, for example for gas, or rising prices for primary products.

Does the next federal government have to relieve companies here?

Above all, the next federal government should improve tax depreciation conditions in order to encourage investment.

What must the economy prepare for in a traffic light coalition?

A mixture of accelerated climate protection measures and increased support for private and public investments could be expected.

In addition, labor costs will rise due to rising minimum wages and a shortage of skilled workers.

And in Jamaica?

A very similar policy, I don't see any big differences to the traffic light, probably a little more influence from the Greens and the FDP, because the Union emerges weaker from the elections than the SPD.

* Merkur.de is part of IPPEN.MEDIA.

Source: merkur

All news articles on 2021-09-29

You may like

News/Politics 2024-01-31T13:39:00.048Z
News/Politics 2024-02-29T11:54:45.112Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.