Dirk Panther Pushes for More Business Support in Response to Tax Relief Package
Businesses Warned of Continued Financial Aid Limitations - Warnings Issued Over Potential Increase in Job Cuts
Saxony's Minister of Economics, Dirk Panther, has welcomed the federal government's tax relief package for businesses, but he doesn't think it's enough. Smaller companies with thin equity may not see significant benefits from the current measures, he noted. The question remains as to how the tax losses incurred by the federal government, states, and municipalities will be made up. Panther assumes that the federal government, responsible for initiating these measures, will bear the brunt of the burden.
The federals' aim is to motivate businesses to invest more, and they've taken a significant step by approving a staggering €46 billion tax relief package. Highlights of this package include extended options for accelerated depreciation on machinery and electric vehicles. These extended depreciation options are estimated to result in a combined revenue loss of around €46 billion for the federal government, states, and municipalities by 2029.
Panther emphasized the tax advantages for electric cars. "Any initiative that can help reverse the slump in electric car manufacturers' sales is a good one—which in turn benefits Saxony's automotive sector," he remarked.
Let's break down the key components of this tax relief package:
- Accelerated Depreciation for Machinery: Companies now have the opportunity to deduct up to 30% of their machinery investments annually for tax purposes until 2027. This accelerated depreciation is meant to boost investment in modern equipment[3][4].
- Electric Vehicle Incentives: Companies buying electric vehicles can now enjoy 75% first-year depreciation, a perk available through 2027. This incentive is intended to boost eco-friendly vehicle adoption[3][4].
- Corporate Tax Reduction: The corporate tax rate is set to decrease gradually from 15% to 10% between 2028 and 2032. This reduction is meant to make Germany a more attractive location for businesses[1][3].
- Research and Development Incentives: The package includes expanded tax concessions for research activities. This is part of broader efforts to boost innovation and competitiveness[4].
- Infrastructure and Additional Measures: Beyond the tax relief package, a separate €500 billion infrastructure fund was authorized to modernize transport, energy, and digital networks over the following 12 years[1][3]. While this fund isn't part of the tax relief package itself, it's worth noting as support for economic growth initiatives.
- To further stimulate business growth, Dirk Panther suggests incorporating vocational training programs into the community policy, focusing on equipping workers with skills relevant to the current industry, finance, and business landscape.
- Given the substantial finance outlay from the tax relief package for accelerated depreciation on machinery and electric vehicles, Panther proposes investigating other cost-effective methods, such as vocational training grants, to ensure the sustainability of business support beyond 2029.
