Reduced taxes fall short of addressing economic concerns
In a bid to revitalize Germany's economy, the federal government has announced a relief package worth nearly 46 billion euros, covering the period up to 2029. The package includes tax cuts, accelerated depreciation, and an "investment booster" for equipment investments, but doubts about its sufficiency have been raised.
The relief package, detailed in an article by Wolfgang Leja, suggests that additional measures are necessary to foster business dynamism and address skilled labor shortages. According to the OECD Economic Survey, these measures include reducing administrative burdens and regulatory barriers, improving competition, and addressing skilled labor shortages.
The administrative and regulatory reforms aim to simplify business registration and operational procedures through greater digitalization and harmonization across government levels. Easing occupational entry regulations and licensing requirements would enable easier business creation and more vibrant market dynamics. Addressing skilled labor shortages could involve reforms in education, training, and migration policies for workers.
The article also emphasizes the importance of combining fiscal reforms with efforts to raise spending efficiency, broaden the tax base, and stabilize the pension system to support sustainable medium-term growth. The "investment booster," scheduled to apply to acquisitions from July 1, 2025, allows for faster depreciation of 30 percent per year for equipment investments.
Beyond tax cuts and accelerated depreciation, the article suggests that targeted public investment, such as an investment offensive for the dilapidated infrastructure, is needed. The tax rate for withheld profits for small businesses will also be reduced, with the total tax burden expected to decrease from around 30 percent to 25 percent by 2032.
The relief package is welcomed by all parties involved, but it remains to be seen whether these additional measures will be sufficient to address the economic concerns beyond tax cuts and accelerated depreciation. The high number of insolvencies, a significant concern for the economic location of the country, underscores the urgency for further steps to boost the economy and increase international competitiveness.
These steps may include reducing bureaucracy, lowering energy and payroll costs, strengthening innovation, digitization, and the capital market. For a more robust and longer-lasting recovery, it is crucial to unlock investment and innovation potential in Germany’s economy.
For more information, please contact Wolfgang Leja at w.leja@our website. A Staatsanzeiger subscription is required to subscribe to topics and save articles.
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The relief package's proposed measures aim to further foster business growth in Germany, as detailed by Wolfgang Leja, and this may involve reducing bureaucracy, lowering energy and payroll costs, and strengthening innovation, digitization, and the capital market. In addition, targeted public investment, such as an investment offensive for the nation's infrastructure, is found to be crucial for unlocking investment and innovation potential in Germany's economy.
