Finance Minister Christian Lindner: "I rule out an increase in the tax burden"

Created: 01/12/2022, 06:00

By: Jens Kiffmeier, Mark Stoffers

Relief yes, higher taxes no: Christian Lindner (FDP) braces himself against high gas prices and huge debts.

But does the plan work?

Berlin – 100 billion euros are flowing into the Bundeswehr because of the Ukraine war, 300 billion euros are being devoured by the relief packages for the energy crisis, and the Corona aid also has to be canceled.

There is no question that Germany is sinking into a debt swamp.

In just three years, the country has accumulated more than 800 billion euros in new budget debt.

And someone has to stand up for it: Minister of Finance Christian Lindner (FDP).

Does he already regret the post?

Interview with Christian Lindner (FDP): Minister of Finance resists tax increases despite high gas prices

"Every day is a challenge," admits Christian Lindner in an exclusive interview with

and

from

.

For almost a year now, as Minister of Finance, he has been administering German taxpayers' money.

When he took office, neither the Ukraine war nor the energy crisis with high gas prices and the massive wave of inflation were foreseeable.

But now the international crises are holding Germany in a stranglehold - and the FDP may have to say goodbye to earlier beliefs: compliance with the debt brake and waiver of tax increases - can this still be sustained?

Time for a chat with the lord of finances about household tricks and disrespect for the rich:

Mr. Lindner, how bad is Germany doing in winter 2022?

Germany is stable despite the crises.

We have a Corona situation and liberal countermeasures that allow more social life than last year.

We have done everything in our power to combat the energy crisis so that people and the economy get through the winter in good shape.

All coal and nuclear power generation capacities are connected to the grid.

We catch the ruinous price peaks with electricity and gas price brakes.

I'm cautiously optimistic.

The energy companies are raising prices one after the other – in some cases by 130 percent.

Do you think you can capture this development, for example with an excess profit tax?

Higher taxes tend not to lead to lower prices.

We have rules on the electricity market according to which the power plant last switched on determines the price for everyone.

These are often gas power plants.

As a result, the producers of wind or solar power generate high random profits.

We limit them and use the billions to reduce the bill for electricity customers.

If energy is used carefully, electricity and gas price controls make the burden bearable in most cases. 

In an exclusive interview with IPPEN.MEDIA, Christian Lindner explains how well Germany is prepared for the winter.

© Michael Kappeler/dpa

War in Ukraine drives up inflation: Finance Minister Linder warns against scaremongering

Nevertheless, many are pessimistic about the future.

Will the crisis vanish into thin air once the Ukraine war comes to an end?

Or will the Germans continue to suffer from high prices, Minister of Finance?

We must and will get inflation under control.

Irrespective of the hopefully imminent end of the war in Ukraine: we must reorganize our energy supply and modernize our country's economic structure. 

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What do you have in mind specifically?

We have to free ourselves from dependencies and at the same time become more efficient, more innovative and more sustainable.

For this reason, we are expanding renewable energies.

What is holding us back are the lengthy planning and approval procedures.

We have to approach many tasks in a less bureaucratic manner.

Regardless of whether it is about the Bundeswehr, more wind and solar power, the modernization of the rail network, closing the gaps in the freeways or clean production in industry - we have to become faster.

What's the problem?

We have clever minds.

We also have a lot of know-how.

We also have a lot of capital.

But what we are missing is a “green light” in the truest sense of the word.

Despite the gas price brake: Lindner defended his approach to financing the relief packages

Nevertheless, the federal government must now put billions in relief in the short term.

What is in store for taxpayers in the coming year?

New burdens instead of relief, as you actually announced?

On the contrary, we remain on course for relief.

For the coming year alone, we have decided on more than twenty billion euros in tax cuts.

Added to this are the electricity and gas price brakes.

We cannot say exactly what funds are being claimed for this.

Because we cannot predict the price development of the market.

Incidentally, that is one of the reasons why I did not include this economic defense shield in the federal budget, but budgeted it for the period up to 2024 in the Economic and Stabilization Fund.

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You have to endure criticism if you make far-reaching and courageous decisions.

On the one hand, we need this flexibility to get the short-term burdens under control. 

And on the other side?

On the other hand, we have to normalize our public finances step by step.

We had the pandemic, now we have the energy war.

But in the federal budget we will still be using the debt brake again in 2023.

So discipline applies to normal political projects again, the crisis expenditure is strictly earmarked and reported separately.

The traffic light coalition should not praise itself too much for the return to the debt brake, because overall we will have an unsustainable government deficit in 2023.

But the claim is clear that we will not incur debts at the expense of the younger generation in the long term.

Debt in the energy crisis: Minister of Finance Christian Lindner rules out tax increases

What does it take to achieve this goal?

Just as the corona measures in the federal budget will expire at the end of February 2023, hopefully we will be able to do without energy aid in 2024.

My goal is that by the end of the 1920s we will be back in the direction of the debt ratio from before the corona pandemic.

This means that the level of debt in Germany, measured against its economic power, should come significantly closer to 60 percent from the current 70 percent.

Does that mean no debt for future generations?

Yes.

We, who benefit from the electricity and gas price brake or from the support of the economy in the corona pandemic, should reduce this burden again within a decade.

This is because we permanently have more economic growth than a national deficit in the public budget. 

But who should foot the bill in the end?

Can you really rule out a tax redistribution?

Relying solely on economic prosperity seems risky.

No, that is anything but daring.

We have to sort of grow out of debt.

This has been the case over the past decade.

At the same time, we have an enormous need for investment in digitization, clean technology and modern infrastructure.

For this we need private capital.

If you don't want to choke off growth and private investment, you should forgo the higher tax burden.

Why?

We already have one of the highest tax burdens in the world.

At the same time, we see that the USA, for example, is entering into massive competition with us with the Inflation Reduction Act.

Increasing the tax burden in this situation would be a dangerous experiment, possibly at the expense of millions of employees in our medium-sized family businesses.

I can therefore say: I rule out an increase in the tax burden.

Christian Lindner does not consider it necessary to increase taxes in the coming year.

Nevertheless, the Germans expect numerous reliefs from 2023 onwards.

And the citizen's income, about which there has been much dispute between the federal government and the opposition in recent weeks, is to be paid out with higher standard rates from January.

In Part 2, Lindner explains how this can be financed and why the packages are socially balanced from the point of view of the FDP.