Growth Opportunities Act: Association of Cities calls for compensation for tax losses after budget ruling

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Bernburg in Saxony-Anhalt (symbolic image): Falling tax revenues are being felt by local businesses

Photo: Klaus-Dietmar Gabbert / dpa

Following the budget ruling of the Federal Constitutional Court, the German Association of Cities has called for significant improvements to the Growth Opportunities Act, which will be discussed by the Bundesrat on Friday. "If, in view of the new billion-euro hole, it is completely unclear where the money for many projects will come from in the future, the federal government must not additionally significantly restrict tax revenues for the municipalities," Chief Executive Helmut Dedy told the AFP news agency. "Otherwise, many cities would have to put urgently needed investments in climate protection, integration, digitalisation or all-day expansion on hold."

As a result of the Growth Opportunities Act in its current form, municipalities would be missing "over nine billion euros by 2028," said Dedy. The cities can no longer cope with tax losses of this magnitude." This will then also be "clearly felt" by the regional economy. After all, most of the investments made by the municipalities flow directly to many local businesses and companies."

Dedy therefore supported the fact that the Federal Council is expected to appeal to the Mediation Committee on Friday in order to achieve improvements to the draft law, which requires approval.

At the end of October, the federal states had already criticised the fact that they would have to bear around two-thirds of the planned tax relief of around seven billion euros per year. The Bundesrat does not consider the proposed amendments to be sufficiently taken into account in the Bundestag bill that has now been adopted.

Federal Finance Minister Christian Lindner (FDP) wants to strengthen the economy with the Growth Opportunities Act. The central element is an investment premium that is intended to promote the climate-friendly transformation of the economy. In addition, it makes it easier to offset losses for tax purposes. In addition, there is a degressive depreciation for new residential buildings for a limited period of time.

According to the German government, the Growth Opportunities Act will cost around 2024 billion euros between 2028 and 32. The Cologne-based Institute of the German Economy (IW), which is close to employers, has calculated that the measures are likely to increase investment in Germany by a total of eleven billion euros by 2028.

mik/AFP