Leading economists in Germany, including Michael Hüther, director of the German Institute for Economic Affairs, Clemens Fuest, president of the Ifo Institute for Economic Research and the two “Economic Sages” Monika Schnitzer and Veronika Grimm, have independently called for a comprehensive economic reform agenda from the next federal government.
According to a report by the “Tagesspiegel”, the economists see a pressing need for action in four areas: the competitiveness of the economy must be improved, investments must be promoted, the infrastructure must be renovated and the excessive bureaucracy must be reduced.
A majority of the economists polled advocate for a reduction in the tax burden on companies: “We need better tax conditions for private investments, for example, by accelerating depreciation” said Ifo President Clemens Fuest. IW Director Michael Hüther, on the other hand, wants to abolish the solidarity surcharge: “Today, it’s mainly companies that pay the solidarity surcharge. This is financially feasible and would significantly relieve the economy.”
Also, economics professor Lars Feld, formerly a chief advisor to former Finance Minister Christian Lindner (FDP), demands tax relief: “It’s about bringing forward tax relief for companies, at least by five percentage points in the corporate tax. This can be financed by reducing expenditures, so this is feasible within the debt brake framework.”
Jens Südekum, a professor at the Heinrich Heine University in Düsseldorf, however, holds the wish to promote investments through broad tax relief for a misconception: “We must not respond to the challenge with offer-policy reforms in the style of F. These will not be enough. We need a large, well-planned modernization agenda that combines elements of offer and demand” he said. “That’s why I hold the proposed investment premium for a good instrument because it targets private investments precisely. Pauschal tax cuts, a bit in corporate tax, are just a pouring-from-a-can policy.” Additionally, a genuine reform agenda is not compatible with the current debt brake, Südekum said.
Monika Schnitzer, chair of the “Economic Sages”, demands “urgently a comprehensive and sustainable pension reform”, as she told the “Tagesspiegel”. Otherwise, the young generation would face significant contribution rate increases. “The retirement age must increase prospectively in line with life expectancy, by eight months for every year of increased life expectancy” Schnitzer said. Furthermore, “no more pension gifts should be made, such as the proposed increase in the mother’s pension.