Wust Demands Compensation from Federal Government Over Investment Program Tax Relief Losses
Claimant demands reimbursement for the funds committed in the investment initiative. - Advocates for Financial Reimbursement in Investment Program under Consideration
In the ongoing spat between the federal government and the states over the multi-billion euro investment program for the economy, North Rhine-Westphalia's Minister President Hendrik Wust (CDU) is stepping up the pressure. Wust is pushing for full compensation due to the revenue losses for states and municipalities resulting from proposed federal tax reliefs.
Wust stated in Düsseldorf, "The 'he who orders, pays' principle is enshrined in the coalition agreement between the Union and the SPD. It's time for it to be implemented." The politician emphasized, "We're not just drifting along like cream on the surface."
Wust anticipates asking for this compensation during Wednesday's top-level meeting of ministers with Chancellor Friedrich Merz (CDU). However, he noted that a 90% compensation could also be possible if a reliable and sustainable solution is found.
Progress or Mediation Committee
Despite this, Wust maintains an optimistic outlook regarding the meeting with Merz. "I'm feeling pretty positive," he said. However, if an agreement is to be reached by the federal council meeting on July 11, the bill must move forward now. "Otherwise, it'll end up in the mediation committee."
Cut to the Chase:
- Wust demands compensation for revenue losses due to federal tax reliefs
- Meeting with Merz takes place on Wednesday
- If agreement not reached by July 11, it may end in mediation committee
- Wust hopeful about progress
The appreciated investment program proposed by Federal Finance Minister Lars Klingbeil (SPD) by Wust. "Germany needs growth," said the CDU politician, "We've been in a recession for three years now." Germany has not suffered three consecutive years of recession, neither in the oil crises nor during the corona pandemic. New growth impulses are required to safeguard employment.
The federal government's plans involve enhancing tax depreciation options for companies making investments. Following this, the corporate tax rate will be gradually reduced to 10% by 2032. Municipalities, however, will bear the disproportionately heavy revenue losses.
Overall, the federal government, states, and municipalities will lose nearly 50 billion euros in taxes due to the planned law, according to calculations from the states' circle. According to Wust's statements, the states and municipalities will have to shoulder around 30 billion euros of this sum by 2029. Without compensation, the NRW state budget alone would be burdened with 3.7 billion euros by 2029, and municipalities would experience an additional 3 billion euros in losses. The budgets of states and municipalities are unlikely to be completely thrown off balance by the investment package in the third year of recession, stated the head of government.
Wust insists on prompt action for old debt solution
Wust also advocates for swift implementation of the agreed-upon special assets of 500 billion euros. So far, it has been arranged that the states will receive one-fifth, i.e., 100 billion euros, from this. Simultaneously, the federal government must submit a bill to reduce municipal debts before the summer break. Due to the persisting old debt problem, many municipalities may not be able to invest if this issue remains unaddressed.
"It will only work if we first shed the crushing debt burden," Wust stated. He also warned the federal government, "Neither the investment fund nor the debt leeway for the states were ever agreed upon as a quid pro quo for the approval of the immediate program."
Communal associations in NRW also demanded compensation from the federal government for tax losses. "Those who dictate tax cuts must also bear the tax losses themselves," the associations explained. "The proposed investment booster by the federal government will serve as the first test of its sincerity regarding the coalition agreement."
Indirect financing of the tax reform from the communal funds of the special assets for infrastructure and climate neutrality would be a breach of promise, the communes cautioned. Given the already grave financial situation, genuine compensation for the communes is urgently required.
- Hendrik Wust
- Investment program
- Federal government
- NRW
- Tax loss
- CDU
- Düsseldorf
- Coalition agreement
- SPD
- Friedrich Merz
- Growth booster
- Germany
- Compensation
- Municipality
- Bold
- Lars Klingbeil
- Hendrik Wust, the Minister President of North Rhine-Westphalia, is demanding compensation for the revenue losses of states and municipalities due to the proposed federal tax reliefs as part of the investment program, emphasizing the 'he who orders, pays' principle agreed upon in the coalition agreement.
- Wust plans to discuss this matter during his meeting with Chancellor Friedrich Merz on Wednesday. If an agreement is not reached by the federal council meeting on July 11, the issue may end up in the mediation committee. Additionally, Wust is pushing for the swift implementation of the special assets of 500 billion euros agreed upon in the coalition agreement to alleviate the old debt problem for municipalities.
