fear of tax losses
City day criticizes Lindner’s relief package
07/15/2023, 07:11 am
Finance Minister Christian Lindner wants to give the economy a new boost with relief in the billions. However, the German Association of Cities fears “massive tax losses”. The situation of municipal budgets is already “extremely tense”, they say.
The German Association of Cities has criticized the billion-dollar tax package planned by Finance Minister Christian Lindner. Verena Göppert, deputy general manager of the city council, warned of “massive tax shortfalls” in trade tax, the most important tax for local authorities. “There must be no cuts in trade tax, because the cities need them in order to be able to finance good services and a good infrastructure for the citizens and the local economy,” says Göppert.
Lindner wants to relieve the economy by around six billion euros a year with a tax package. A “Growth Opportunities Act” should strengthen Germany’s competitiveness and ensure more investment, the Ministry of Finance said on Wednesday. Lindner therefore proposes almost 50 tax policy measures. The core element is a bonus for investments in climate protection announced in the coalition agreement. The draft has not yet been approved by the government.
Göppert said that the Ministry of Finance apparently wanted to “put the ax” on the trade tax with the planned Growth Opportunities Act and suspend the so-called minimum profit taxation. “For the cities, that would mean massive tax shortfalls in their most important tax.” That would be really bad news for the cities’ ability to act.
Municipal budgets are “extremely tight” anyway. The future financing of the accommodation and care of refugees has still not been clarified. At the same time, cities are constantly faced with new tasks, according to Göppert. She mentioned the heat transition, building energy law and climate change adaptation. “We need a lot more money, not less. If the Ministry of Finance now wants to cut us around two billion euros a year, that’s a fatal signal.”
According to the draft law, the Ministry of Finance is planning temporary changes to the minimum taxation of profits – as a “measure to strengthen the liquidity of medium-sized companies”. This is what is known as a loss carryforward. According to the City Association, the current regulation ensures that many municipalities with locations of companies with high loss carryforwards receive a minimum annual income from trade tax.