After weeks of disagreement, the German coalition on Tuesday agreed on a four-year, 32 billion euro corporate tax cut package to help the country’s struggling economy.
This month’s earlier failure to approve the “Growth Opportunities Law” was generally interpreted as an indication that the ruling coalition of two socially conscious leftist parties and one fiscally liberal party was too cumbersome to rule.
“We’ll discuss how to achieve a big boost,” At the onset of a two-day cabinet retreat at the baroque palace Schloss Meseberg outside of Berlin, Chancellor Olaf Scholz made the statement. “The German economy can do more.”
The second quarter of the German economy saw no signs of recovery from the winter recession, further solidifying its place among the worst major economies in the world.
The stimulus plan, which is small in the perspective of a $4 trillion economy, will result in a shortfall in tax income for the federal government in its first year of implementation of 2.6 billion euros, 2.5 billion euros for the states, and 1.9 billion euros for municipalities.
Liberal Finance Minister Christian Lindner pushed for the reform, but it was thwarted when Greens Family Minister Lisa Paus demanded 12 billion euros in child support.
Public discontent with the coalition’s performance is growing. According to a Forsa poll released on Tuesday, 61% of respondents were so fed up with coalition infighting that they had stopped paying attention to policies.
According to a government document seen by Reuters, subsidies are expected to nearly quadruple to 67.1 billion euros in 2019 from 2021.
The new legislation encourages businesses to invest in climate-friendly projects, offers tax breaks for research, and permits them to deduct greater losses from earnings from prior fiscal years.
