Dhen the year is drawing to a close, many people have reached their limits – citizens, companies and, ultimately, the state as well. Immediately after the hot pandemic phase, the federal government got into debt in the “energy war with Russia” (according to Finance Minister Christian Lindner) to an extent that previously seemed unimaginable in order to buffer peak loads.
It is clear that this cannot go on forever. If energy in Germany becomes permanently more expensive – not only compared to earlier, but also compared to other countries – it tends to become more attractive for companies to relocate production to cheaper countries abroad. There is therefore a need for adjustment everywhere.
What has to happen in Germany so that the business location does not fall further behind? What the experts at the Treasury Department wrote down about this is actually quite obvious: If one advantage is lost and there are no others, it doesn’t really help to distribute money, rather the supply conditions in the country should be improved. These can include nice things like more generous research funding, better depreciation terms, and tempting employee equity participation.
But that is not enough. It takes more than one-off help. International comparisons have long put Germany in an inglorious place at the top when it comes to the tax burden. This applies to companies, but also to employees. This is not a good starting point in the fierce competition for labor and capital.
What is economically obvious is politically difficult to implement. The reduction in income tax and corporation tax that has now been brought into play will not be possible with the SPD and the Greens. The same applies to the longer lifetime of nuclear power plants, the lifting of the fracking ban and the suspension of rising CO2-Pricing. The reminder to be careful with basic child security and other social benefits will hardly meet with enthusiasm. The paper from the Ministry of Finance is one thing above all: a declaration of war on the coalition partners.
