Billion-euro Growth Opportunities Act stopped in the Federal Council
The Growth Opportunities Act is intended to boost the stagnating German economy. However, the Chamber of States sees an unequal distribution of costs. The Mediation Committee must now find a compromise for the federal and state governments.
The Bundesrat has blocked tax relief for companies amounting to seven billion euros per year. A clear majority of the federal states voted in Berlin to refer the so-called Growth Opportunities Act to the Conciliation Committee of the Bundestag and Bundesrat. It is still unclear when this will take place and what form a compromise might take.
Several state premiers have criticized the fact that two thirds or almost 20 billion euros of the missing tax revenue would remain with the states and municipalities. According to earlier statements from the responsible finance committee, the Bundesrat is seeking a fundamental revision of the draft bill.
The Bundestag approved the bill on Friday last week with the votes of the "traffic light" coalition. It provides for relief for small and medium-sized companies amounting to around seven billion euros per year from 2024 and a total of over 32 billion euros in the coming years. The package is intended to breathe new life into the sluggish German economy. The centerpiece is a premium of 15 percent of the total amount for investments in climate protection measures. However, this is less extensive than the "super write-offs" actually envisaged in the coalition agreement, which were also intended to boost investment in digitalization.
Elsewhere, however, companies are now being granted significantly better depreciation opportunities for a limited period of time - both for movable assets and housing construction. Companies will also be better able to offset losses against profits. In addition, tax incentives for research will be extended.
The Federal Council, composed of representatives from Germany's 16 federal states, has expressed concern about the unequal distribution of costs associated with the Growth Opportunities Act. Despite the Bundestag's approval of the bill by the "traffic light" coalition, this act aimed at boosting economic growth through tax relief and investment incentives, the Bundesrat has referred it to the Conciliation Committee for a potential revision. The Economic growth plans, which include tax relief worth seven billion euros annually for small and medium-sized enterprises, might be altered in the negotiations within the traffic light coalition government.
Source: www.ntv.de
