DThe billion-dollar growth package with tax relief and reductions in bureaucracy for companies has been approved. The Federal Council approved the so-called Growth Opportunities Act on Friday by a majority after discussions in the Mediation Committee.
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.
Originally, the law was intended to be a multi-billion dollar sweeping blow for all industries, providing relief for companies in the economic downturn and encouraging 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 economy urgently needs this stimulus”
After the vote, Christian Lindner has already promised further relief for the economy. The growth package is an important signal, he explained on Friday on X (formerly Twitter). “But its volume is significantly smaller than I originally planned.” Further steps must now be taken to improve the economic situation. “We are working on it,” promised Lindner.
The Prime Minister of Rhineland-Palatinate, Malu Dreyer (SPD), appealed for support before the vote: “I believe that we cannot afford to harm Germany in the current economic situation by acting on this corner in terms of party politics.” Yours My counterpart from Mecklenburg-Western Pomerania, Manuela Schwesig (SPD), who co-chaired the mediation committee, warned: “The economy urgently needs these impulses.”
The law was passed in the Bundestag, but the states then stopped it in the Bundesrat and sent it to the mediation committee because they feared a high loss of revenue. The Mediation Committee is a committee with representatives from the Bundestag and Bundesrat in which both sides try to reach agreement on legal reforms if there are differences.
The CDU and CSU also made their approval dependent on the federal government relieving the burden on farmers. They demanded that cuts to agricultural diesel subsidies be reversed. Alternatively, the farmers would have to be relieved of the same volume through other measures.
Premiums for climate protection investments have been canceled
During the mediation process, the volume of the growth package has already been reduced from the previously planned seven billion euros to 3.2 billion euros per year. The core, the bonus for climate protection investments, has been canceled. There remained a light version, which the Union committee still did not agree to because the traffic light coalition did not promise any concrete measures for the farmers. Hessel criticized: “But I can’t understand how you can take things hostage and let an entire country stand still for it.”
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 they were “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 sees 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.”
The gradual dismantling of agricultural diesel subsidies should also be voted on in the Federal Council on Friday. The states have the opportunity to call the Mediation Committee on this too. However, this would also put on hold other measures that the federal government has decided to consolidate the budget for 2024, such as the higher aviation tax and stricter sanctions on citizens’ money. After the Federal Constitutional Court ripped a billion-dollar hole in the federal government’s budget shortly before the end of the year, it now has to make more savings.
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