Urgent Economy Matters: Nations Push for Swift Action on Layoffs and Taxation Reforms
Unfiltered, candid perspective on the economy:
While disagreements over tax revenues persist, the states are keen on pushing forward the financial relief package for the economy. A meeting between federal and state governments is tentatively planned for June 18, as announced by Saxony’s Prime Minister Michael Kretschmer (CDU) and Lower Saxony’s Prime Minister Stephan Weil (SPD) following their gathering in Berlin. Chancellor Friedrich Merz (CDU) won't be in attendance due to his US trip.
Deadline for major decisions before the summer break:
Lies and Kretschmer were questioned about an agreement on June 18, to which Lies responded: "We've got to act fast. We'll have to get started right away." Their intention is to set the stage for a decision in the Bundesrat in July. The last scheduled plenary session of the Bundesrat before the summer break is on July 11.
The states anticipate revenue losses, especially for their municipalities. The proposed relief package consists of improved tax depreciation choices for companies acquiring machinery, equipment, and electric vehicles. From 2028, the corporate tax rate is also due to decrease.
Appreciation for the federal government's listening ear:
Lots of heads of government reiterated their shared objective of bolstering the economy. "We want incentives for investment and the corporate tax reform," said Kretschmer. "This is a crucial contribution towards making Germany competitive."
Both leaders applauded the federal government's willingness to chat. Kretschmer remarked on the "collective spirit," while Lies expressed amazement at the recent positive developments, with which Kretschmer agreed. During the time of the previous coalition government, relations between the state leaders and Chancellor Olaf Scholz (SPD) were sometimes tense.
The aim: "Shift in national sentiment"
It's essential not to juxtapose economic relief with local investment decisions, declared Lies. "We also need to invest domestically." The goal is to foster a "shift in national sentiment" in Germany, where individuals perceive improvements thanks to democracy compared to the current status quo.
Kretschmer underscored the states' role as patrons of municipalities. "We're all aboard with this reform, but we need financial compensation. The numbers are so vast that they can't be saved." He disclosed that discussions about “planning acceleration, reduction of bureaucratic hassle,” and modernization of the states would also take place at the meeting with Merz.
In the pursuit of economic recovery, the states are collaborating with the federal government to advance a financial relief package, indicating a focus on business and finance. States anticipate significant revenue losses, particularly for municipalities, and proposed solutions involve improved tax depreciation benefits for businesses acquiring machinery, equipment, and electric vehicles, along with a decrease in the corporate tax rate from 2028.
