There was a long dispute between the Union and the traffic light coalition over the “Growth Opportunities Act” – now the Federal Council voted for it. The measures are intended, among other things, to relieve companies of their taxes.
The Federal Council has approved the so-called Growth Opportunities Act, with which the federal government wants to enable tax relief and reduce bureaucracy for companies. Overall, the measures are intended to provide relief with a total volume of 3.2 billion euros.
Among other things, the law provides for more favorable depreciation options for companies, for example by introducing declining balance depreciation for movable assets. In addition to regulations to reduce bureaucracy, the measures also include a research allowance.
Lindner: Important signal
Chancellor Olaf Scholz viewed the law that has now been passed as an “important sign for our economy and a successful future for the country.” It will help companies to invest in research, development and economic growth in tense times, Scholz wrote on the short message service X.
Federal Finance Minister Christian Lindner also viewed the Federal Council’s approval as an important signal, but at the same time emphasized that the volume of the law was “significantly smaller” than I had originally planned. Parliamentary State Secretary Katja Hessel described the compromise on the “Growth Opportunities Act” as balanced. “It sends the urgent signal that the economy needs now,” said the FDP politician.
The leader of the Green Party, Omid Nouripour, highlighted the “significant increase in tax support for research, especially for small and medium-sized companies,” which could be implemented with the help of the Growth Opportunities Act. “In this way, we are giving German medium-sized companies a boost in technology leadership,” says Nouripour.
Business associations appear relieved
Business associations also welcomed the approval of the state chamber, but at the same time criticized that the package of measures would only have a limited effect. The law is a first step towards improving the tax framework – “but nothing more,” said Tanja Gönner, general manager of the BDI industry association. The law has shrunk significantly and the relief volume for the German economy is now only around half as high as originally planned. “A determined political growth agenda” looks different. Before the summer break, the German Chamber of Commerce and Industry called for “a concrete reform agenda with relief that will quickly be implemented in everyday operations.”
The Central Association of the German Construction Industry emphasized that the law represents an “urgently needed growth stimulus” for housing construction, as investors and builders would have more security and be able to initiate more projects again, said association managing director Felix Pakleppa. Federal Construction Minister Klara Geywitz expressed herself with similar words after the Federal Council’s decision: “Write off five percent of the investment costs for six years – that is a really big boost for housing construction in Germany.”
The chemical association VCI, on the other hand, described the law as a “triple step towards more economic growth” because it had been “massively slimmed down”.
Union blocked original bill
The version of the law originally presented by Lindner’s Federal Ministry of Finance was much more extensive than the version now passed by the state chamber. The FDP politician’s draft envisaged almost 50 tax policy measures and a total volume of around seven billion euros.
However, the original draft met with decisive resistance from the Union – primarily on the grounds that the federal government wanted to finance around a third of the costs from the package by eliminating the tax break for agricultural diesel. The CDU and CSU called for the announced removal of subsidies on agricultural diesel to be reversed or for other forms of relief to be introduced for farmers.
Mediation Committee agrees on “light variant”
The federal government’s first version was passed in the Bundestag thanks to the majority of the traffic light parties, but in the Bundesrat the states decided to submit the controversial law to a mediation committee – on the one hand because of the Union’s ongoing resistance, and on the other hand because of feared losses of income for the federal states as a result planned tax breaks.
The mediation committee finally agreed on a “light version” of the law – with a significantly lower financial volume, but without the bonus for investments in energy efficiency that Lindner was aiming for.
In addition, the traffic light coalition is said to have signaled its willingness to provide relief for farmers shortly before the vote in the Federal Council. Although she did not present any concrete measures, she assured the “swift implementation” of new relief for the agricultural sector in a written statement. However, she wants to stick to the abolition of subsidies for agricultural diesel.
Lothar Lenz, ARD Berlin, tagesschau, March 22, 2024 10:43 a.m