The German government is facing mounting criticism regarding proposals to accelerate tax cuts and implement unconventional economic stimulus measures, as concerns grow over the potential impacts on public finances and overall economic stability. Prominent economist Achim Truger, a member of the German Council of Economic Experts (Sachverständigenrat Wirtschaft), has issued a stark warning against a premature reduction in corporate tax rates currently slated for 2028.
Truger’s remarks, delivered to the Redaktionsnetzwerk Deutschland, directly challenge recent calls from figures like Bavarian Minister President Markus Söder (CSU) who have advocated for an earlier implementation. “It’s a complete folly” Truger stated, emphasizing that the purported economic boost from such a move would be minimal. More critically, he warned that accelerating the tax reduction would inevitably necessitate severe cuts to public spending, ultimately proving detrimental to economic growth. “The resulting counterproductive austerity measures would ultimately depress the economy” he warned, strongly advising against the proposal.
Beyond the corporate tax debate, Truger dismissed suggestions from employer associations to eliminate a public holiday as a means of stimulating the economy. He characterized the idea as based on an “overstated” impact, questioning the validity of adjusting economic forecasts to accommodate the addition or subtraction of holidays, highlighting the unusual nature of such calculations compared to international practices. Furthermore, he underscored that the current economic challenge stems primarily from insufficient demand, rendering the holiday elimination a largely irrelevant solution. Truger also pointed out that Bavaria, a region often cited in discussions of holiday prevalence, demonstrably performs economically well despite boasting a relatively high number of public holidays.
These criticisms underscore a deeper political tension within Germany. While policymakers seek visible measures to bolster economic prospects, Truger’s pronouncements highlight the potential for short-sighted policies to destabilize public finances and ultimately hinder sustainable growth. The debate now centers on whether the pressure for immediate action will outweigh the considered counsel of economic experts advocating for a more cautious and strategically planned approach.