The German Economic Institute has taken a close look at Finance Minister Lindner’s Growth Opportunities Act. According to the “Rheinischer Post” it comes to the conclusion that economic dynamism is unlikely to increase as a result.
According to a media report, the planned tax relief for companies through Federal Finance Minister Christian Lindner’s Growth Opportunities Act will hardly improve economic dynamics in Germany overall. In its article, the “Rheinische Post” refers to an as yet unpublished study by the German Economic Institute (IW).
According to the study, the law will only increase German economic output by a total of around seven billion euros between 2024 and 2028. Annual economic growth will increase by 0.05 percent. “Even if the steps are going in the right direction, the effect on investment activity and the German gross domestic product is likely to be small,” is the institute’s conclusion, according to the report.
A maximum of 9,000 new jobs
The IW calculated the results with the help of the “Global Economic Model” from the Oxford Economics think tank. The planned tax relief was fed into this statistical model. According to this, fixed investment in the German economy would be around 0.6 percent higher as a result of the Growth Opportunities Act in 2028 than without the law.
In the time frame under consideration from 2024 to 2028, a maximum of just under 9,000 additional jobs would be created. At the same time, this would lead to disproportionate tax reductions for municipalities, writes the author of the IW study, Tobias Hentze. This therefore raises “the question of excessive demands” on cities and municipalities.
There are signs of resistance from the countries
According to a Reuters survey, several federal states have already expressed reservations about the finance minister’s tax relief package. According to the “Rheinischer Post”, the federal states apparently do not want to wave the law through in the Bundesrat and call the mediation committee.
The Growth Opportunities Act is actually intended to bring an average of seven billion euros in annual relief for companies. From the perspective of the states, the bone of contention with the law requiring approval is that they and the municipalities would have to bear the main burden. The bill puts the tax shortfall at 2.6 billion euros for the federal government, 2.5 billion euros for the states and 1.9 billion euros for the municipalities.