Solidarity push by Landesbank chief economist: tax debate

Created: 04/10/2022Updated: 04/10/2022 15:59

Moritz Krämer, Chief Economist at Landesbank Baden-Württemberg (LBBW).

© Bernd Weißbrod/dpa/archive image

Burden the rich more to deal with the consequences of war and climate change?

From the point of view of the chief analyst of a large German bank, this is necessary.

Bayez thinks so too.

Not the FDP.

Stuttgart - New debate about tax increases: According to the chief economist of the largest German 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." Baden-Württemberg's Finance Minister Danyal Bayaz (Greens) jumps in, the FDP rejects it.

Kraemer said that the country recently had such "Herculean tasks" ahead of it after German unity.

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 those on low incomes, who have lost purchasing power anyway." The tax increase must primarily affect the wealthy.

“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.

Finance Minister Bayaz said 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.

The FDP parliamentary group leader Christian Dürr, on the other hand, said: "I don't think much of tax increase debates.

Particularly in the conflict with Russia, our geopolitical strength is our economic strength.

We shouldn't weaken this right now through additional burdens on private households and medium-sized companies.” The fact that a state bank like the Landesbank Baden-Württemberg is now bringing tax increases for people and the private sector into play is not a good signal.

Michael Theurer (FDP), Parliamentary State Secretary in the Federal Ministry of Transport, also said: "Although the path to national debt cannot be continued in the long term, it is also true that tax increases are poison for the economy." Rather, growth forces must be strengthened.

Above all, the reduction of unnecessary bureaucracy is necessary for this.

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