Brandenburg's Woidke demands compensation for impending tax losses!

Brandenburg's Woidke demands compensation for impending tax losses!

With a clear signal to politicians, Brandenburg's Prime Minister Dietmar Woidke welcomed the federal government's planned tax investment program. But the call is not just a friendly pat on the back: Woidke is calling for compensation for the financial losses that the federal, state and local governments will suffer due to the expected tax relief. In a timely announcement, he explained that the targeted tax relief for companies could lead to reduced revenue of around 48 billion euros by 2029. A considerable part of this – around 30 billion euros – would fall back on the states and municipalities, which would put a considerable strain on the financial situation of the regional administrations. According to Woidke, it is important that the growth impulses for the economy do not come at the expense of municipal finances.

His focus is clearly on investments in the infrastructure of the states and municipalities. Woidke therefore supports a motion for a resolution to modernize company co-determination and sees the need to revise the Works Constitution Act. These measures are particularly important in order to meet the challenges of digitalization and artificial intelligence. A strong foundation for employee rights and social partnerships is important to him.

Tax cuts and investment boosters

At the federal level, Federal Finance Minister Lars Klingbeil (SPD) presented a draft law for comprehensive tax cuts and investment incentives, which is due to come into force from July 2025. The core of these measures is a planned “investment booster”, under which companies can claim special depreciation of up to 30 percent for certain investments from 2025 to 2027. This will provide generous tax relief from July 1, 2025 to January 1, 2028, which will, among other things, reduce corporate tax from the current 15 percent to 10 percent from January 1, 2028. These tax reliefs are intended to strengthen the competitiveness of Germany as a business location.

But the enthusiasm is accompanied by strong caution. According to that ZDF The tax losses could be 630 million euros in 2025, 4 billion euros in 2026 and grow to 17 billion euros by 2029. These failures not only affect the federal government, but also the states and municipalities. It is therefore essential to design the measures in such a way that they do not lead to an overburdening of municipal budgets.

The challenges for companies

The Association of German Chambers of Industry and Commerce (DIHK) particularly emphasizes that corporate taxation in Germany, at over 30 percent, is relatively high compared to other countries. The OECD average is around 23 percent, while the EU average is 21.1 percent. These high taxes and the associated bureaucratic hurdles make it difficult for many start-ups and innovative medium-sized companies to acquire capital and stay in Germany. They often tend to invest in countries with more attractive conditions, which could endanger Germany's economic base in the long term.

The last significant tax reform took place in 2008 and conditions have changed significantly since then. In order to strengthen competition, the chambers have developed proposals for corporate taxation, which, among other things, want to reduce corporate tax to a maximum of 25 percent and immediately abolish the solidarity surcharge. The chambers hope that tax relief and investment incentives will lead to an economic recovery, the development of new capacities and ultimately new jobs.

The question remains: How will politics respond to the challenges and demands? The coming months are likely to be exciting because there is a lot at stake for the future of the German economy and local communities.