The traffic light had to make many compromises with the Growth Opportunities Act. The Federal Council has now agreed.
The Federal Council has approved the Federal Government's Growth Opportunities Act. In the state chamber's vote on Friday, there was a clear majority in favor of the law, which the Union had initially rejected in protest against the removal of subsidies for agricultural diesel. The path is now clear for the planned tax relief for companies.
Finance State Secretary Katja Hessel described the compromise reached as balanced. “It sends the urgent signal that the economy needs now,” she emphasized in her speech to the country representatives.
Only a light version remained
Originally, it was supposed to be an all-round blow worth billions for all industries, which would relieve the burden on companies in the economic downturn and stimulate investments in climate protection. Finance Minister Christian Lindner (FDP) proposed almost 50 tax policy measures. Essentially: a bonus for climate protection investments, plus tax support for research, better ability to offset losses in tax returns and the reduction of bureaucratic hurdles.
The Federal Council blocked the package passed by the Bundestag with the argument that states and municipalities would have to shoulder a large part of the costs and tax losses. The state chamber therefore called the mediation committee. In initial discussions, the negotiating partners reduced the volume of relief from the previously planned 7 billion euros annually to 3.2 billion euros.
Basically, all that was left was a light version – primarily tax relief and incentives to stimulate the construction industry. The climate protection investment bonus, originally the core of the law, has been overturned. SPD-led states were satisfied with the slimmed-down solution, but the Union made an additional condition for its approval: the SPD, Greens and FDP would have to forego the abolition of the tax relief for agricultural diesel for farmers, which the Bundestag had already decided on.
Lindner: No connection between agricultural policy and law
The federal government has now promised relief for the agricultural sector, but did not present a package of concrete measures until the vote in the Federal Council. Agriculture Minister Cem Özdemir (Greens) simply said that they are “in close contact with the profession”. The plan is to ease income tax and strengthen farmers in the value chain. Above all, it is about reducing bureaucracy.
Lindner made it clear that he saw no connection between possible relief for farmers and the growth package. “There is no connection to agricultural policy; the Union has constructed it,” he told the German Press Agency. The Union is also not in a position to impose such conditions because it shares responsibility for the poor competitive situation in the German economy. “During the CDU's time in government, since 2014, we have dramatically lost competitiveness.”
Merz contradicts Lindner
CDU leader Friedrich Merz contradicts Lindner's account. The “numerous reliefs” promised by the federal government in a protocol statement had “mostly enabled the Union-led federal states to approve the Growth Opportunities Act this morning,” he said. The statement includes several “very good decisions.”
However, Merz does not believe that the economic burden provided by the growth package is sufficient. “This provides a small relief for the economy in Germany,” said the opposition leader. “However, this relief will not be enough to overcome the structural weakness of our economy's growth. More is needed for that.” He does not expect any proposals to come from the SPD-led federal government in the next few months.
