As of: February 10, 2024, 3:37 p.m
By: Andreas Jäger
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The German economy is shrinking.
In order to counteract this development, various proposals are currently being discussed - ranging from abolishing solidarity and tax cuts to debt-supported subsidies.
Munich – “Sick man of Europe”: This is what Germany was often called by leading economists in the early 2000s.
The reason for this: economic output fell and the unemployment rate was high.
And if you look at the current figures, this title unfortunately seems to fit again.
The gross domestic product (GDP), i.e. the value generated by all goods and services in a country, fell by 0.3 percent in 2023 compared to the previous year.
What particularly stands out is the manufacturing industry: According to the Federal Statistical Office, a decline of 2 percent was recorded here.
Finance Minister Lindner proposes abolishing the solidarity surcharge
The question of how the trend reversal could be achieved and Germany's economy strengthened again is currently being hotly debated in politics and business.
The suggestions and ideas are quite different.
Finance Minister Christian Lindner (FDP) favors abolishing the solidarity surcharge for companies.
According to estimates by the German Economic Institute (IW), around 500,000 companies in Germany currently pay this.
“The big advantage is that states and municipalities would not be affected by such relief for companies,” said Lindner in the ARD program “Report from Berlin”.
Finance Minister Lindner (l.) and Economics Minister Habeck disagree on the question of how the economy can be stimulated again.
© Michael Kappeler/dpa
Approval for Lindner's proposal comes from Michael Hüther, head of the German Economic Institute (IW).
The abolition is long overdue, Hüther told the
Rheinische Post
, as the solidarity “is basically a corporate tax in disguise”.
The Taxpayers' Association also welcomes the Finance Minister's proposal.
“Many small and medium-sized businesses would also benefit from this,” explained association boss Rainer Holznagel in an interview with the newspapers of the
Funke media group
.
Economist Fuest calls for special debts and tax cuts
Economics Minister Robert Habeck (Greens) recently appeared open to tax cuts for companies.
He would like to finance this through a so-called special fund, i.e. additional debts.
Criticism of this comes from Finance Minister Lindner - the FDP politician rejects financing on credit.
He receives support from the Union.
“The finance minister is right: growth cannot be subsidized,” wrote parliamentary group vice-president Jens Spahn on the short message service X.
Clemens Fuest, President of the Ifo Institute, however, is in favor of special debts for public investments in infrastructure, digitalization and decarbonization.
“There is far too little investment in Germany, from the public and especially from the private side,” said the economist in an interview with the
FAZ
.
Fuest also advocates for the elimination of taxation for sustainable finance without replacement and for a reduction in corporate tax for companies to ten percent.
Together with trade tax, companies should pay a maximum of 25 percent tax.