State Leaders Demand Swift Solution for Tax Losses in Investment Package by Next Week
Executives from various state governments promise a resolution to combat tax evasion by the end of the week. - Government Leaders Vow to Settle Tax Evasion Issues Within a Week
State premiers are ratcheting up the heat on the federal government to reach a speedy agreement on the economic investment program. By next week, a resolution for the revenue losses of states and municipalities must be in place, according to Lower Saxony's Prime Minister, Olaf Lies (SPD), ahead of talks in Berlin. "By next week, we'll have the Bundestag's verdict. Until then, we need a solid agreement in place so everyone knows what to expect," he stated.
The Bundestag is set to deliberate on the package next Thursday, aiming to stimulate the flagging economic condition. It encompasses incentives for investments, such as extended tax depreciation options for machinery and electric vehicles, and a decrease in the corporate tax rate from 2028. However, these plans could lead to revenue losses for the federal government, states, and municipalities due to decreasing taxes.
Schwesig: Emphasis on municipal compensation
The states are demanding financial reimbursement from the federal government, with a focus on the precarious financial condition of many heavily indebted municipalities. Mecklenburg-Western Pomerania's Minister President, Manuela Schwesig (SPD), hinted that the states might settle for partial compensation. "The primary goal is for municipalities to receive complete compensation, and naturally, the states should be accommodated as well," she said. Today's talks will discuss the compensation scope and method. "It's crucial that a proposal is presented before the Bundestag's final vote," she added. After the Bundestag's vote, the bill moves to the Bundesrat, where the states hold the final say on July 11.
Voigt pushes for long-term financial solution
Thuringia's Minister President, Mario Voigt (CDU), called for a fundamental resolution of federal-state financial relations. He advocated for an automatic compensation mechanism that would be triggered in cases where federal decisions cause tax losses for the states, enabling faster decisions during the legislative period and preventing recurring disputes. He also suggested that the states could be given relief first, with the potential to repay money to the federal government if the economy improves. "There are multiple paths that can be discussed," he stated.
- Investment Package
- Bundestag
- Berlin
- SPD
- Manuela Schwesig
- Investment Program
- Tax Loss
- Olaf Lies
- Economic Situation
Sources:1. Municipalities Insist on Full Compensation for Tax Losses in Investment Package2. Missing Connectivity Between Federal Government and Municipalities: Experts
- The state leaders are urging the federal government to expedite a resolution for the revenue losses of EC countries, including states and municipalities, due to the investment package, to be finalized by next week during the Bundestag meeting in Berlin.
- Manuela Schwesig, Minister President of Mecklenburg-Western Pomerania, emphasized the need for full compensation for municipalities, with a secondary focus on state compensation, and recommended considering long-term policy-and-legislation solutions to address federal-state financial relations, such as an automatic compensation mechanism for tax losses in the investment program, within the general news context.
