Wuest Warns Feds: Pay Up Money We'll Lose Due to Your Tax Cuts!
Demands Compensation in Investment Scheme - Pushes for Compensation in Investment Program: Wüst Advocates for Financial Remuneration in Investment Scheme
Hey there! Here's a breakdown of the heated negotiations going on between the federal government and the states, specifically North Rhine-Westphalia, over the multi-billion-euro investment program for the economy.
North Rhine-Westphalia's Minister President Hendrik Wuest (CDU) is pushing the federal government to fork over some cash because of the revenue losses for states and municipalities due to the planned federal tax relief. According to Wuest, the principle of "he who orders, pays" is ingrained in the coalition agreement between the Union and the SPD. It's high time they applied it in this scenario.
"We're not just drifting along as though we're floating on the surface of the soup," Wuest said bluntly. Wuest plans to present the demand for complete compensation to Chancellor Friedrich Merz (CDU) during their top-level meeting on Wednesday.However, Wuest conceded that a 90% compensation could suffice if there's a reliable and sustainable solution in place.
Wuest seems optimistic about reaching an agreement with Merz, stating, "I'm feeling quite cheerful." But if they aim to strike a deal during the Bundesrat session on July 11, the ball needs to start rolling now. Or else, it'll end up in the conciliation committee.
Wuest applauded the proposed investment program by Federal Finance Minister Lars Klingbeil (SPD). "Germany needs growth," Wuest said, adding that they're entering their third recession year, a phenomenon that Germany hasn't experienced even during the oil crises or the COVID-19 pandemic. More growth incentives are necessary to secure jobs.
The federal government plans to improve tax depreciation options for companies and gradually reduce the corporate tax rate to 10% by 2032. However, municipalities will shoulder a disproportionate share of the resulting revenue losses.
Calculations suggest that the planned law will result in a total revenue loss of almost 50 billion euros for the federal government, states, and municipalities. Around 30 billion euros of this fall on the shoulders of states and municipalities, with North Rhine-Westphalia's state budget alone absorbing a hit of 3.7 billion euros without compensation. Municiplalities will take a hit of around three billion euros in losses. However, Wuest asserted that the investment package won't completely derail the budgets of states and municipalities in the third recession year.
Wuest also urged swift implementation of the agreed special asset of 500 billion euros. So far, it's planned that the states will receive one-fifth, or 100 billion euros, from this. The federal government needs to submit a bill to reduce municipal debts before the summer break. If the old debt problem isn't resolved, many municipalities won't have the funds to invest, Wuest warned.
"'It will only work if we first break free from this crushing debt burden,' Wuest stated. Wuest also gave the federal government a warning: 'Northern Rhine-Westphalia has already splashed billions for debt reduction. It's now the federal government's turn.'"
NRW municipal associations also urged the federal government not to renege on their promises, demanding compensation for tax losses. "He who orders the tax cuts must also bear the tax losses themselves," the associations stated. "The federal government's planned investment boost will be the first litmus test of how serious they are about the coalition agreement."
Municipalities warned that indirectly financing the tax reform with their funds from the special assets for infrastructure and climate neutrality would be breaking a promise. Given the current financial strain, Wuest insists that genuine compensation for municipalities is essential.
So there you have it - Wuest's calling out the federal government left and right, demanding that they compensate for the losses they'll incur due to their tax cuts. Let's see how this all shakes out!
- Hendrik Wuest
- Investment program
- Federal government
- NRW
- Tax loss
- CDU
- Düsseldorf
- Coalition agreement
- SPD
- Friedrich Merz
- Growth booster
- Germany
- Compensation
- Municipality
- Bold
- Lars Klingbeil
- In the heated negotiations, Hendrik Wuest, the Minister President of North Rhine-Westphalia, emphasizes the need for the federal government to pay for the revenue losses that states and municipalities may incur due to the planned federal tax relief, as stipulated in the coalition agreement between the Union and the SPD.
- The NRW municipal associations also echoed Wuest's stance, urging the federal government not to renege on their promises, asserting that "he who orders the tax cuts must also bear the tax losses themselves." This call comes as a test of the federal government's commitment to the coalition agreement, especially in relation to the proposed investment program designed to boost the economy.
