As of: February 6, 2024, 1:27 p.m
By: Lisa Mayerhofer
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Split
The German economy is weakening and the government is divided over its growth strategy.
While Lindner wants to cancel the solos, Habeck suggests a special fund.
Berlin – The German economy is going through a dry spell.
The Organization for Economic Cooperation and Development (OECD) has adjusted its growth forecast for Germany for the current year downwards.
On Monday, the Paris-based organization said it now expects an increase of 0.3 percent.
In November, the OECD had forecast economic growth of 0.6 percent for Germany.
So it's high time for the traffic light coalition to take action.
But as is often the case, there is disagreement about how the economy should get back on track.
In particular, there is no agreement on the question of financing measures to promote economic growth.
Tax reform: Habeck wants special assets, Lindner wants to abolish solidarity
Briefly summarized: Finance Minister Christian Lindner (FDP) and Economics Minister Robert Habeck (Greens) have proposed a tax reform for companies, but do not agree on how it should be financed.
Chancellor Olaf Scholz (SPD) would first like to wait for the result of the Growth Opportunities Act.
But first things first:
Habeck proposed a special fund in the Bundestag on Thursday to fix structural problems.
For example, he mentioned the possibility of creating tax credits and tax depreciation options.
Lindner rejects a special fund because it would mean new debts.
Christian Lindner (from left to right), Robert Habeck and Olaf Scholz: The next point of contention about the traffic lights is heating up.
© Kay Nietfeld/dpa
Instead, Lindner favors a “dynamization package” that covers the areas of the labor market, climate protection, energy prices, bureaucracy and taxes.
He proposes abolishing the solidarity surcharge for companies.
According to Lindner, this would have the advantage that states and municipalities would not be burdened.
However, the counter-financing still needs to be discussed.
The solidarity surcharge was introduced in 1991, a year after German reunification, to help finance economic development in the new federal states.
Until 2020, it was levied as an additional 5.5 percent levy on income and corporate taxes to cover the costs of reunification.
Since 2021, only top earners and corporations have to pay it.
Last year, the solidarity brought the federal government revenue of around twelve billion euros.
Chancellor Scholz calls for concentration on the Growth Opportunities Act
Habeck expressed skepticism about the proposal to abolish the solos.
The complete abolition of the solidarity would increase the budget deficit, said the Vice Chancellor on the ARD program “Caren Miosga”.
The two chairmen of the SPD and the Greens, Saskia Esken and Ricarda Lang, also rejected Lindner's proposal.
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Chancellor Scholz was reserved in the debate on Monday evening.
He called for the focus to initially be on enforcing the Growth Opportunities Act in the Federal Council.
“It is practical, tangible and works quickly,” said Scholz at a joint press conference with French Prime Minister Gabriel Attal.
The Growth Opportunities Act provides relief for companies amounting to seven billion euros per year.
A mediation process on this project is currently underway in the Federal Council.
The countries led by the Union are making their approval conditional on the withdrawal of the abolition of subsidies for agricultural diesel.
However, Habeck criticizes the fact that the law is now smaller than originally planned and would therefore only have a “homeopathic” effect.
Fuest: “It depends on the captain when the ship is in a storm”
Clemens Fuest, President of the Ifo Institute, urged the leaders of the traffic light coalition to agree on an economic policy strategy.
“There is a blatant disagreement between the economics and finance ministries and as a result there is extreme uncertainty,” said the head of the Munich Economic Research Institute at a discussion organized by the OECD.
There was also a lack of an economic policy strategy in previous governments.
“It just wasn’t that bad,” said Fuest.
“Because it’s the captain who matters when the ship is in a storm and not when you’re sailing through calm waters.”
With material from dpa and Reuters
The editor wrote this article and then used an AI language model for optimization at her own discretion. All information has been carefully checked.