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Bundestag passes Growth Opportunities Act: “We now need signals to provide tax relief for the German economy”

Photo: Serhat Kocak / dpa

The tough struggle seems to have come to an end: After consultations between the federal and state governments, the Bundestag has passed the Growth Opportunities Act - although the financial volume has now been significantly reduced.

The traffic light factions of the SPD, Greens and FDP had announced that they would agree to the result of the mediation committee of the Bundestag and Bundesrat on Wednesday evening.

He had reached an agreement, but the Union did not support it.

This involves tax relief with a volume of around 3.2 billion euros.

It is still uncertain whether the amended law will also find a majority in the Federal Council on March 22nd.

The Union is making its approval conditional on the federal government reversing the reduction in tax subsidies for diesel in agriculture decided by the Bundestag.

In the roll-call vote there were 377 yes votes and 267 no votes, with one abstention.

The Union had announced its rejection.

Thorsten Frei, Parliamentary Managing Director of the Union, justified this with the cuts in tax aid for agricultural diesel.

"We say no to a decision that claims to relieve the burden on the German economy, although it wants to burden another part of the economy with an additional 450 million euros," said the CDU politician.

Traffic light representatives accused the Union of blocking urgently needed growth impulses for the economy.

“We now need signals to ease the tax burden on the German economy,” said FDP parliamentary group leader Christian Dürr.

Green party leader Andreas Audretsch accused CDU leader Friedrich Merz of "taking companies in Germany hostage for their own profile."

SPD politician Michael Schrodi also accused Merz of wanting to harm the government by rejecting it, but it would hit the economy.

Hesse's Prime Minister Boris Rhein (CDU) has meanwhile rejected the accusation of blocking the economic growth package for party political reasons.

“We are not blocking this Growth Opportunities Act, this Growth Opportunities Act is a mild breeze,” he said on ZDF’s “Morgenmagazin”; after all, it could only mobilize 0.05 percent growth.

“We are dealing with a fire in the economy - and you don't put it out with a garden hose, but with a fire hose.” He can therefore only advise the economy: “Anyone who believes that the traffic lights will help you will end up Being left behind."

The Growth Opportunities Act provides tax relief for housing and businesses as well as dozens of smaller changes to simplify taxes.

An informal working group of the Mediation Committee, with the participation of Union politicians, halved the original legislative plans to relief of around 3.2 billion euros and removed measures such as a bonus for climate-friendly investments by companies.

The contents of this law are therefore no longer controversial between the federal and state governments or between the traffic light coalition and the Union.

The core of the dispute, however, is the agricultural aid cuts in another law, which is also on the agenda in the Federal Council on March 22nd.

However, the Union cannot stop the Second Budget Financing Act on its own because – unlike the Growth Opportunities Act – it does not require express approval in the state chamber to come into force.