In a move that has sparked debate, the Minister-President of Baden-Württemberg, Winfried Kretschmann, has announced that the state will not support the federal government’s planned tax relief for businesses in its current form. The relief, aimed at encouraging companies to invest more, would result in a significant reduction of state revenue, mainly at the expense of the states and municipalities.
According to the plan, the federal government would grant special depreciation to companies for three years, followed by a gradual reduction of the corporate tax rate by one percentage point annually. The resulting revenue shortfall for the state is estimated to be around 46 billion euros between 2025 and 2029, with the majority of the loss falling on the states and municipalities.
While acknowledging the need to boost the competitiveness of the economy, Kretschmann emphasized that the costs of new tasks assigned to the states and municipalities by the federal government must be financed in a sustainable and secure manner, without relying on new debt at the state level. This stance is seen as a direct response to the argument of the SPD’s parliamentary group leader, Matthias Miersch, who suggested that the states could afford the revenue shortfall due to the recently relaxed debt brake.