Reform instead of more debt: Habeck rows back in the dispute over corporate tax

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Economics Minister Habeck (Greens) visits Thyssenkrupp

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Ina Fassbender / AFP

Federal Economics Minister Robert Habeck (Greens) has offended the coalition and even the economy with his proposal for a special fund worth billions that would relieve the burden on companies financed through more national debt. Now he is giving in and favoring a reform of corporate taxes. He also sees "that overall we have corporate taxation that is no longer internationally competitive and investment-friendly enough," Habeck told "Welt am Sonntag." "That's why we should think about how we can finance tax relief and tax incentives for investments in the future, for example, in order to really unleash the forces."

However, Habeck said, there is “extremely narrow financial scope” for this at the federal, state and local levels. “And yes, we will certainly have to make savings, including in the 2025 budget,” said the minister.

Habeck was responding in particular to criticism from Federal Finance Minister Christian Lindner (FDP) of his idea for a debt-financed special fund to support the economy and address structural problems. He brought tax credits and tax depreciation options into play.

In particular, the route through more debt was criticized by the coalition partner FDP. Habeck's suggestion had not been coordinated, complained Lindner. “The idea was surprising in every respect,” the finance minister told “Welt am Sonntag.” And it is also “an unusual occurrence.” Habeck is saying that he is “dissatisfied with the existing economic policy of the federal government and that he believes something completely different is necessary.”

Lindner said he believes an “economic turnaround” is necessary and is prepared to accept the offer for discussion: However, he is not convinced of “taking on hundreds of billions of euros in debt in order to pay subsidies on credit.” This would “deform the social market economy.” Instead, he proposed a “dynamization package” with more flexibility in the labor market and less bureaucracy. The tax incentives in the Growth Opportunities Act for investments and research should also be expanded towards a corporate tax reform.

Habeck now took up this suggestion: “I agree with Christian Lindner: We have to do more for growth and economic dynamism. That's why I'm happy to work with Christian Lindner on a dynamization package. The Economics Minister said he had just introduced suggestions for this into the "joint government work."

However, Habeck rejected Lindner's request not to increase citizens' money at the end of this year in return for financing. "If we really want to develop force to keep up with the USA, we can't do it with a zero round of citizen's money."

Business also considers the special pot initiative to be problematic

With his willingness to implement a tax reform, Habeck is responding to the demands of many business representatives. “Our clear priority is a better investment and growth climate through corporate taxes, which are reduced back to a European and international level,” said the managing director of the Federation of German Industries (BDI), Tanja Gönner, to “Welt am Sonntag”. We are currently a long way from that.

Steffen Kampeter, general manager of the employers' association BDA, clearly opposed a special fund for the economy. »A two-thirds majority is currently not evident. “The Economics Minister should therefore focus on his core competence and improve the framework conditions for the German economy with a simple majority in the Bundestag,” he told the newspaper. "The recession has no time for diversionary tactics."

kig/AFP