LBBW chief economist calls for new solos
Created: 04/10/2022 07:44
"The turning point does not come for free": Moritz Krämer.
© Bernd Weißbrod/dpa
"New Herculean tasks": Germany must increase taxes and burden the rich more in order to master the consequences of war and climate change.
Stuttgart - According to the chief economist of Germany's largest state bank, the federal government must increase taxes because of the enormous challenges posed by the Ukraine war and climate change.
"I advocate the reintroduction of the solidarity surcharge," said Moritz Kraemer, chief economist at Landesbank Baden-Württemberg (LBBW), the German Press Agency 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, railways 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.”
The solos must be socially staggered.
"We mustn't dig into the pockets of the small earners, who have lost purchasing power anyway."
The tax increase should primarily hit the richer.
“That must then also be borne by those who have benefited from all the rising real estate values and shares.
These are not the average earners, ”explained the chief economist.
The soli 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.
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.
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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 should also be no savings when investing in infrastructure.
Kraemer said he was aware that it was very important to the FDP that a tax increase was excluded 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 don't work.
Something has to move here.” dpa
