SSG: Tax equalization must reach local authorities in full

Following the Bundesrat's approval of the so-called economic booster, Saxony's cities and municipalities are calling for the tax relief to be passed on in full. "It is now crucial that the tax compensation reaches and remains with the municipalities in full," said Mischa Woitschek, Managing Director of the Saxon Association of Towns and Municipalities (SSG). What is intended for the municipalities by the federal government should not be siphoned off by the state within the municipal financial equalization system, he said.

At the same time, the SSG praised the billions in tax relief for companies. "We also expect a lot from the investment booster for our Saxon companies," explained Woitschek. However, the cities and municipalities would not have been able to cope with the associated tax losses.

Tough negotiations with the federal government

Among other things, the plan is to extend depreciation options in order to facilitate investments. From 2028, corporation tax is also to be gradually reduced from 15 percent to 10 percent in 2032. According to estimates, the federal, state and local governments will lose around 48 billion euros in tax revenue as a result of the package of measures. The federal government will cover a large part of the shortfall - especially for the municipalities, some of which are heavily indebted, and will do so in full by 2029.

In "very tough negotiations" with the federal government, it was agreed that the shortfall in revenue for the municipalities would be compensated, said Saxony's Minister President Michael Kretschmer (CDU). Now Berlin must set the course for growth. "We have no time to lose."