“We need a boost”
The construction industry finds Lindner’s relief plans too lax
08/15/2023, 4:50 p.m
Housing construction is not progressing in Germany. Finance Minister Lindner wants to relieve the trade with tax policy measures. However, the industry association is disappointed, he had hoped for much more.
The German construction industry has called for speedy implementation of the so-called Growth Opportunities Act planned by the federal government. “Impulses for investment and growth are urgently needed,” explained the general manager of the ZDB industry association, Felix Pakleppa in Berlin. With the right incentives, the fall in demand can be prevented from affecting employment.
“The situation on the housing market is deadlocked. Demand for housing has been falling for a year now,” explained Pakleppa. In May alone, building permits and incoming orders fell by a third in real terms. The construction industry therefore “expressly welcomes the initiative by the Ministry of Construction in the Growth Opportunities Act to anchor degressive depreciation for residential construction”.
Accordingly, in the year a building is completed and in the following three years, seven percent of the construction costs can be written off. According to the current regulation, it is three percent. The so-called degressive depreciation (deduction for wear and tear) would then allow depreciation of five percent in each of the following four years.
However, this step alone will not be enough to get housing construction back on track, explained Pakleppa. “We need a boost in both rental housing construction and owner-occupied real estate.”
Lindner wants to relieve the construction industry with six billion euros
Finance Minister Christian Lindner’s Growth Opportunities Act could be decided in the cabinet on Wednesday. In the known version, the proposal provides for a total of 50 tax policy measures with a relief of more than six billion euros.
The German Association of Small and Medium-Sized Enterprises (DMB) views the law with mixed feelings. It is good that the federal government wants to improve the framework conditions for many companies “at least somewhat”. However, improvements need to be made in many areas. “We are particularly disappointed with the plan for the investment premium,” said the DMB. The minimum limit for applications is set too high, especially for small and medium-sized companies at 50,000 euros. The volume for the Growth Opportunities Act totaling six billion euros is also “too low”.