Prime Minister Michael Kretschmer (CDU) has made financial compensation a condition for the approval of the federal states to the planned tax relief for the economy. At the Bundesrat meeting in Berlin, Kretschmer described the package as the "right instrument". All state premiers had committed to supporting it together.
"However, it is also clear that this package will only find a majority here if there is financial compensation," said Kretschmer. The German government is planning better tax write-offs for companies that purchase machinery, equipment and electric cars. Corporation tax is also set to fall from 2028.
Tax revenue to fall by 48 billion euros
According to calculations from the federal states, the law will reduce tax revenue by around 48 billion euros. According to Kretschmer, 13 billion of this would be at municipal level and 16 billion at state level. "We cannot bear these costs."
As "advocates for the municipalities", the federal states would fight for permanent, reliable funding. "That is a tough point," emphasized Kretschmer. The municipalities are currently not adequately funded and this must change. The Minister President called for a connectivity mechanism to be drawn up in the coming days. Responsibility for tasks and funding should be in one hand according to the principle of "whoever orders, pays".
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