SHARE
COPY LINK

ECONOMY

Germany bets on big tax cuts to boost ailing economy

Chancellor Olaf Scholz's government on Tuesday agreed a huge tax relief programme for companies in a bid to revive Germany's sputtering economy.

Pictured are euros.
Photo by CAR GIRL on Unsplash

The package would ease the burden on “small and medium-sized enterprises by around 7 billion euros per year”, the government said in a statement.

While coalition parties have haggled over the extent of the tax cuts in recent months, Germany’s economy has flatlined.

Europe’s largest economy stagnated in the second quarter of 2023, having dipped into recession around the turn of the year.

READ ALSO: Sick man of Europe again? Germany’s economic woes in focus

The slowdown has come as Germany struggled to cope with the impact of the Russian invasion of Ukraine last year, which sent prices for energy and food soaring.

The sluggish growth figures were reason for the German government to go on the “offensive”, Scholz said at a press conference on the first day of a ministerial retreat outside Berlin.

The tax cuts — part of a 10-point plan put forward by the government — were intended to “stimulate growth for our country” and make sure companies made the decision to invest in Germany, Scholz said.

Among the measures agreed were a premium for energy-saving investments, and rule changes to make it easier for companies to write off losses.

‘Turnaround potential’

Recent disappointing data have added to concerns that Germany will drag down the eurozone’s economic performance this year, with the International Monetary Fund predicting it will be the only major advanced economy to shrink in 2023.

“We take it seriously that Germany is growing less dynamically than others,” Finance Minister Christian Lindner said at the press conference.

The country however had a “huge turnaround potential”, which would be unlocked via the targeted relief package, Lindner said.

The pain has been felt particularly acutely in recent months in Germany’s key industrial sector, as exports have plummeted against a backdrop of high inflation and subdued global activity.

Consumer prices rose at a 6.2-percent pace in July — down from last year’s peak but still very elevated.

The post-coronavirus recovery in key trading partner China has meanwhile lost much of its momentum.

With the outlook still gloomy, the government has come under pressure to carry out more thorough reforms to breathe new life into the economy. 

The recent crisis had “deepened structural problems that have existed for a long time”, the influential BDI industry lobby said recently.

Among the concerns raised by business are continuing high energy costs, cumbersome regulations, a lack of skilled labour and a slow shift to a digital economy.

The government sought to address some of these issues in its 10-point plan, which noted efforts to speed up the expansion of renewable energy capacity and steps to reduce bureaucracy.

In June, Germany passed a law easing immigration rules for skilled workers in a bid to counter industry-wide shortages.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

MONEY

How German ministers want to protect online ticket purchases

Once a year, consumer rights ministers from Germany's federal and state governments gather for a joint conference. This year, improving online ticket sales and better data protection measures are on the agenda.

How German ministers want to protect online ticket purchases

North Rhine-Westphalia’s consumer protection minister Silke Gorißen (CDU) will present proposals for further consumer protections for online ticket sales at the consumer ministers conference (VMK) on Thursday and Friday. 

Gorißen is pushing to make online ticket sales more transparent and give consumers more rights to back out of purchases if they don’t have enough information. 

Under the proposals, consumers would receive more information before purchasing tickets, such as details on the number of tickets sold by each provider and the prices for different seat categories.

Currently, ticket prices are often only visible during the purchasing process. 

The ministers will also consider whether consumers should be granted a right of withdrawal when buying tickets online. 

READ ALSO: How Germany is making it easier for consumers to cancel contracts

“The process of buying tickets is becoming increasingly complex and confusing, often limited to very narrow time windows,” Gorißen told DPA ahead of the conference. “I expect providers to act more in the interest of consumers. The market power of large ticket portals should not result in unclear and non-transparent sales.”

More data protection online

According to DPA, Gorißen also wants users of telecomms services to be better protected when it comes to their personal data. 

NRW’s consumer minister believes providers of emails, chats, or telecommunications services should be required to put measures in place to detect malware that’s designed to steal personal information from users. This should be done at the EU level, Gorißen said. 

Moreover, Gorißen says there should be more information on online safety made available through a consumer hotline. 

“IT security responsibility should not solely depend on the digital competence of users,” the CDU culture minister explained. “Protection against cyberattacks must become a societal responsibility.”

READ ALSO: The German mobile companies with the best – and worst – coverage

The proposals are set to be voted on by consumer ministers on Friday. 

SHOW COMMENTS