By Andrea Thomas
BERLIN (Dow Jones) – The Federal Council has stopped the Federal Government’s Growth Opportunities Act for the time being and sent it to the mediation committee of the Bundesrat and Bundestag. A possible compromise will now be discussed there. There were concerns in the state chamber about the planned tax relief, which would lead to loss of revenue for states and municipalities.
Lower Saxony’s Prime Minister Stephan Weil (SPD) accused the federal government of having presented a “contract at the expense of third parties” with the project, in which the states and municipalities would have to bear 63 percent of the costs and the federal government would only have to bear 37 percent. He also criticized the fact that the current aim was to strengthen the local level and not just weaken it.
Saxony’s Prime Minister Michael Kretschmer (CDU) attested that the federal government had proceeded with such a law without consulting the states. She behaved according to the motto “eat or die”. So cooperation is not possible.
“I very much hope that in the end we will be able to take a sensible path here that will make the right, necessary growth impulses possible, but will result in a cost distribution that does not further aggravate the difficult situation, especially at the local level,” said Kretschmer.
With the Growth Opportunities Act, the federal government wants to reduce the burden on the economy by around 7 billion euros per year from 2024. The aim is to create impulses for more growth and a foundation for investments, especially by small and medium-sized companies.
Among other things, the law provides for a new investment bonus of 15 percent of the total amount of climate protection measures, which is intended to promote the transformation of the economy and improve location conditions with tax incentives for investments in clean and climate-friendly technologies. There are also plans for more research funding, a temporary reintroduction of declining depreciation (depreciation) for movable assets, a degressive depreciation of 6 percent for residential buildings and a changed loss offsetting.
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DJG/aat/apo
(END) Dow Jones Newswires
November 24, 2023 04:45 ET (09:45 GMT)