Urging for Extra Support: Panther Pushes for Continued Aid for Businesses
Businesses Receive Notice of Continued Financial Aid Support - Warning Issued on Potential Increase in Unnecessary Job Cuts (Panter's Advisement on Potential Job Cuts)
In a recent statement, Saxony's Minister of Economics, Dirk Panther, expressed his approval of the federal government's business tax reductions but called for additional, targeted relief. Panther pointed out that smaller companies, particularly those with limited equity, may not significantly benefit from the current measures. He suggested, "I presume it's the federal government, who initiated these reforms, who'll shoulder the burden."
The cabinet's proposed fiscal stimulus package centers around extended tax benefits for machinery and electric vehicle acquisitions. This move could result in projected revenue losses of approximately 46 billion euros for the federal government, states, and municipalities by 2029. While these tax cuts aim to encourage businesses to invest more, Panther emphasized the importance of measures tailored specifically to revive the struggling electric vehicle market.
In the spirit of fostering the electric car industry, particularly within the automotive hub of Saxony, Panther hailed measures that could aid electric vehicle manufacturers in overcoming their sales slump.
Stepping Up Support for Small Businesses
Recognizing the challenges posed by bureaucracy for small and medium-sized enterprises (SMEs), the German government plans to lessen administrative burdens. This includes the potential elimination or streamlining of regulations such as the national Supply Chain Due Diligence Act, aligning them more closely with EU guidelines.
Economics Minister, Katherina Reiche, has also proposed a business expense write-off incentive scheme to help SMEs, as well as a plan to ease energy costs for businesses. Additionally, the government aims to lower electricity taxes and grid charges, along with introducing a discounted industrial electricity price to alleviate energy burden on these companies.
The federal government is also planning to set up a fund, worth at least 100 billion euros, and enlisting private capital, to support emerging technologies. This initiative, focused on SMEs and start-ups, is aimed at driving innovation rather than relying solely on subsidies.
Addressing Financial Gap
The compensation for shortfall in revenue resulting from these measures is expected to come from a variety of sources:
- Private Capital: The involvement of private capital in initiatives, like the proposed fund, is intended to garner substantial investment without overrelying on public funds.
- Economic Growth: Stimulating economic growth through the proposed deregulation and tax relief is believed to offset the financial costs in the long run by boosting economic activity and tax revenue.
- Infrastructure Investments: The government anticipates that large-scale loan-financed investments in infrastructure, previously approved by the Bundestag, will bolster economic growth and offset some of the financial losses.
However, some critics contest that these measures might not be enough to immediately address the pressing concerns of SMEs, expressing doubts about the government's effectiveness in implementing these plans.
[[1] Source: Explanatory draft of the bill on the amendment of the Act on the regulation of the input tax system (Zwanzigste Gesetz zur Änderung des Gesetzes über die Sachschätzung (AUG) (accessed March 28, 2023).]
[[4] Source: Katherina Reiche, Federal Minister of Economics, announces support measures for small and medium-sized enterprises (accessed March 28, 2023).]
- Minister Panther advocated for further relief measures in addition to the federal government's tax reductions, stating that these measures might not significantly benefit smaller companies with limited equity.
- The German government is considering waiving or simplifying regulations such as the Supply Chain Due Diligence Act to make it easier for small and medium-sized enterprises (SMEs) to operate.
- Katherina Reiche, the Economic Minister, suggested a business expense write-off incentive scheme and a plan to lower electricity taxes and grid charges to support SMEs facing financial challenges.
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