Federal Council decision: Mecklenburg-Western Pomerania is fighting for tax money!

Federal Council decision: Mecklenburg-Western Pomerania is fighting for tax money!

Mecklenburg-Vorpommern, Deutschland - Today, the Federal Council advises on a comprehensive business package that the Federal Government has launched. The discussion takes place in the context of significant tax relief for companies that are intended to boost the economic situation in Germany. Mecklenburg-Western Pomerania is basically supportive, but at the same time demands compensation for the expected tax failures. According to NDR, the aim of the law is to create better conditions for investments through improved depreciation and a reduction in gastro tax.

Prime Minister Manuela Schwesig (SPD) emphasizes the need to bring the economy back into shape in Germany. An important step in this direction is the reduction in energy prices. However, associated measures lead to tax failures that could be over 30 billion euros. For Mecklenburg-Western Pomerania, this means a loss of around 140 million euros in tax revenue, which prompted the Prime Minister to request financial compensation from the federal government.

tax relief in focus

The planned tax relief for upcoming legislative initiative was promoted by the cabinet, which is to relieve companies in particular. The approval of the Federal Council is crucial for the implementation. Tax expert Tobias Hentze from the Institute of German Economy in Cologne emphasizes that the degressive depreciation creates targeted incentives for companies in order to make previous and higher investments. However, he points out that the positive effect of these measures is only limited and that the tax burden for corporate profits is currently above the OECD average, which could require a reduction in corporation tax [SPIEGEL] (https://www.spiegel.de/wirtschaft/kunternehügen-bigen-milliarliarliardenschwere tax relief-fuer-company-a5250-6348-46b9-6500a8347b51).

The federal government plans to reduce corporate tax from 2028 earlier. This hopes to strengthen Germany's business location. Nevertheless, the countries and municipalities also have to bear the less income, which in particular presents the municipalities with challenges. These will have a third of the discharge in the coming years, which corresponds to a total of around eleven billion euros. However, the municipal share of the tax revenue is only 15 percent, which means that many municipalities could get into financial difficulties.

look into the future

The agreement between the federal states and the federal government is sought before the summer break. A prime minister conference under the direction of Chancellor Friedrich Merz (CDU) will take place next Wednesday. In the Bundestag there is a decision on the draft law on June 26, according to which the Federal Council will follow. So it remains exciting whether the economic package will receive the necessary approval and what effects it will have on companies and tax policy in Germany.