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POLITICS

Central bank sees little room for tax cuts

Axel Weber, the president of Germany’s central bank, said on Saturday that deteriorating public finances means there is little room for tax cuts, which have been made a priority by the country's incoming centre-right coalition.

Central bank sees little room for tax cuts
Photo: DPA

At a meeting of the International Monetary Fund in Istanbul, Weber said that the government needs to figure out how much money it will have and come up with a list of priorities and decide what programs can be cut.

“There is very little play room to reduce the total [tax] burden on citizens if expenditures are not cut,” Weber told reporters.

The Free Democratic Party, led by Guido Westerwelle, want to drastically overhaul the tax code and replace the current graduated tax rates with three rates of 10, 25 and 35 percent at a likely cost of around €50 billion. Chancellor Angela Merkel’s Christian Democrats have promised a more modest tax cut of €15 billion to stimulate growth, primarily through lowering the bottom income tax rate from 14 to 12 percent.

Bundesbank estimates show that the German economy is recovering from the worst economic crisis in the Federal Republic’s history. But gross domestic product is expected to shrink by approximately five percent in 2009.

And the bank’s data suggest that growth will be anaemic in the long-term, raising the pressure on the new government to cut expenditures and reform public spending. Weber said despite the current recovery, Germany’s economy might not grow more than between one and 1.5 percent annually in the coming years.

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POLITICS

KEY POINTS: What to know about Germany’s partial legalisation of cannabis

Cannabis is to be partially freed for consumption in Germany starting April 1st. Why is this such a landmark legal reform, and what new rules and restrictions are in place?

KEY POINTS: What to know about Germany’s partial legalisation of cannabis

Why is this a historic moment?

The law decriminalises cannabis and legally recognises it as a non-narcotic. Germany will become the third European country, after Malta and Luxembourg, to legalise adult recreational use. And the law makes it one of the most liberal among developed economies. 

READ ALSO: Germany gives green light to partially legalise cannabis from April

Only Canada, whose law allows individuals to buy from licensed retailers and carry up to 30 grams of cannabis, is more permissive.  

The cannabis bill also lowers the barrier for doctors to prescribe medical marijuana to patients. It will now be considered a normal prescription instead of a narcotic. Previously patients needed to have a chronic illness or be seriously ill to get a prescription. 

What is the timeline for legalisation?

Beginning April 1st, adults will be allowed to carry up to 25 grams of cannabis for recreational use. They can also keep up to 50 grams of marijuana at home and grow up to three plants for personal use. Note that is three plants per person, not per household. 

On July 1st, adults can begin joining “cannabis social clubs” where they can receive monthly allotments of marijuana. And in the future, the bill lays out a plan to test out municipal five-year pilot programs for state-controlled cannabis to be sold in licensed shops. 

Can cannabis be purchased in Germany after April 1st?

There is no way to buy cannabis directly, as it won’t be available for general purchase in a store. Instead, you can grow the plant yourself or join a cannabis club this summer. The cannabis clubs can begin growing cannabis on July 1st. 

What will cannabis clubs do?

Cannabis clubs can have up to 500 members. Clubs can give members 25 grams of cannabis per day and up to 50 grams of the plant per month. For members under 22 years old, clubs can allot up to 30 grams of cannabis per month. 

For cultivation club members between 18 and 21-year-olds the level of THC -the substance in cannabis that gives you the “high” – will be limited to help minimise the impact of marijuana use on developing brains. 

Cannabis in Dresden

Martin Reuter, head of the Sanaleo shop for CBD products in Dresden’s Neustadt, holds a cannabis flower for sale in his hands. Photo: picture alliance/dpa | Robert Michael

Clubs cannot sell weed to their members, but they are allowed to charge membership fees. Under the law, all excess production must be destroyed. 

Cannabis social clubs can set their own requirements for membership so long as the minimum age of membership is 18 and members can prove German residency. The law also gives states the ability to limit the number of clubs according to population density. 

Can you consume cannabis in public?

Yes, but there are some parameters. You cannot consume weed within 100 metres of schools, sports facilities or around minors. You can also only smoke cannabis in public between the hours of 8pm and 7am. 

How does the public feel about the law?

Germans remain divided on the new legislation with 47 percent in favour of the plans and 42 percent against the legalisation, according to a YouGov poll published on Friday March 22nd.

The law was also met with sharp criticism from doctors, legal professionals and representatives from some of the nation’s 16 federal states. The conservative CDU and CSU parties expressed consistent opposition to the bill on the Bundestag floor. 

READ ALSO: Why is Germany’s cannabis draft law so controversial?

What happens if you break the rules?

Minors who are caught consuming cannabis will be required to take part in prevention programmes. It is unclear what rules will apply to cannabis in road traffic, shipping and air traffic because it is still under review by expert committees.  

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