Concerns are mounting regarding the financial strain on local municipalities in Germany, prompting calls for adjustments to taxation policies. Stefan Körzell, a board member of the German Confederation of Trade Unions (DGB), voiced these concerns, highlighting the precarious situation faced by communities across the nation.
Körzell emphasized that future investments should not come at the expense of the social state, underscoring the need to avoid cuts in crucial areas. He specifically referenced ongoing debates surrounding reductions to citizen’s benefits, educational programs and international development aid, arguing that such measures, alongside slashed funding for industrial decarbonization and hydrogen initiatives, are detrimental. He urged parliamentarians to reverse these planned cuts.
While acknowledging a planned investment of €116 billion as a step in the right direction, Körzell cautioned that, despite special funds, the financial flexibility for municipalities is diminishing in the medium term. The urgent need for sustainable funding solutions for local governments was underscored, with an existing investment backlog of €216 billion and systemic underfunding posing significant challenges.
To address this, Körzell suggested exploring options such as a wealth tax and a revised inheritance tax as potential avenues for bolstering municipal income and ensuring their long-term financial stability. The DGB’s statement reflects a broader debate regarding equitable resource allocation and the resilience of Germany’s social welfare system.