German Cities Association Urges Federal Government to Fully Offset Municipal Tax Losses through Investment Program
The German Cities Association is calling on the federal government to fully offset the tax losses of municipalities through the coalition’s investment program. According to the association’s president, Burkhard Jung, the federal government must finance the economic growth impulses and not burden the already over-stretched municipalities with a significant portion of the losses.
The issue of tax losses through the planned “Investment Booster” is set to be discussed at the minister-presidents’ conference with Federal Chancellor Friedrich Merz and the state premiers on Wednesday. Jung has demanded that the federal chancellor bring a clear promise to the meeting, ensuring that the federal government will finance the tax relief for the economy itself and fully offset the tax losses of the cities one-to-one.
The government plans to support the economy with tax relief for companies. By 2029, the federal government, states and municipalities will face tax losses of around 50 billion euros due to the measures. For the municipalities, this translates to a minus of 13.5 billion euros in the coming years, warned Jung, who is also the mayor of Leipzig. “This adds to the already dramatic record deficit of the municipal budgets of 25 billion euros in the last year, leaving the cities with practically no room for action and threatening further cuts in municipal offers such as public transportation, culture and sports.”
According to Jung, the investment program of the federal government would turn into a zero-sum game. “On one side, the investment program is intended to strengthen investments in the economy, while on the other side, public investments on the ground are almost made impossible” he said. “This makes no sense.