"Sound the Alarm": Schwesig sounds the alarm on municipalities' financial strain due to Investment Booster
Schwesig Issues Caution over Potential Strains for Municipalities Due to Increased Investment - "Municipalities Braced for Strain": Schwesig Issues Caution
Manuela Schwesig, SPD politician in Mecklenburg-Western Pomerania, isn't holding back. "Our municipalities are already straining with significant budget gaps," she warns. Increasing fees for citizens and the trade tax for businesses would be theprice to pay, she adds, but a company gains nothing "if it can better depreciate taxes and thus receive relief, but on the other hand has to pay a higher trade tax."
Smart move, according to Schwesig? Not quite. "States would expect a clear commitment from the top meeting of the federal and state governments on Wednesday, that there will be compensation, especially for the municipalities," she asserts.
Anke Rehlinger, SPD Minister President of Saarland, agrees. "We states want the growth booster, we want to agree, but we must also be able to agree," says Rehlinger to the magazine "Spiegel." The sticking point? Financial concessions for states and municipalities from the federal government. Rehlinger emphasizes they've signaled their willingness to compromise on this issue.
Now, the federal government hopes to stimulate a sluggish economy with the Investment Booster – primarily via tax relief for companies. The states back the plans, yet fear potential tax losses in the billions.
So, the upcoming meeting between the ministers-president and the federal chancellor Friedrich Merz (CDU) in Berlin could get heated, as the topic is likely to take center stage in the afternoon.
- États des Länder
- Manuela Schwesig
- SPD
- Investment Booster
- Municipalités
- Gewinnsteigerung
- Anke Rehlinger
- Verluste des Besteuerungen für die Bundesländer
[Supporting Details:]
The financial concession discussions concern the legislative negotiations surrounding the immediate tax investment program intended to boost Germany as a business location. The proposed bill includes propositions such as higher expense limits and expanded research allowances, which may result in tax revenue losses for the states. As the Federal Council represents the states, securing its approval is essential, yet uncertain given the financial implications. Potential concessions may be necessary during legislative proceedings, such as adjusting the proposed Investment Booster percentages, modifying electric mobility promotion efforts, or incorporating additional measures not yet included in the draft bill (e.g., VAT reductions in the catering sector or increases in the kilometer allowance) [1]. The final status depends on upcoming federal and state-level approvals and possible compromises during the legislative process.
[1] Source: ARD, Bundesrat, Federal Government plans
- Manuela Schwesig, the SPD politician in Mecklenburg-Western Pomerania, calls for clarity from the federal government regarding financial compensation for states and municipalities, citing concerns over their strained finances due to the projected tax revenue losses from the Investment Booster.
- Anke Rehlinger, the SPD Minister President of Saarland, echoes Schwesig's sentiments, advocating for compromise on financial concessions from the federal government as a prerequisite for agreement on the Investment Booster, which aims to boost Germany as a business location through tax relief for companies.
