Investment booster: Prime Ministers argue over billions in aid!

Investment booster: Prime Ministers argue over billions in aid!

The federal government's planned "investment booster" is at the center of the political discussion and was discussed at a joint dinner between the Chancellor and the Prime Minister. While Chancellor Olaf Scholz stayed in the USA for an inaugural visit to President Donald Trump, Friedrich Merz from the Union did not attend the meeting of the Prime Ministers in Berlin. The “investment booster” aims to stimulate the weakening German economy through tax relief for companies, which is considered particularly necessary in times of stagnating growth. On Thursday, the Bundestag will discuss the legislative package for the first time, which was drafted as part of the coalition agreement between the CDU, CSU and SPD.

A central measure in the legislative package is special depreciation, which allows companies to offset investment costs against their profits. From July 1, 2025, companies should be able to claim special depreciation of up to 30%, which will apply until January 1, 2028. According to Finance Minister Lars Klingbeil, the estimated tax losses by 2029 amount to a total of 46 billion euros, of which 17 billion euros are attributable to these super write-offs alone.

Reactions of the Prime Ministers

The reactions of the prime ministers are mixed. Lower Saxony Prime Minister Olaf Lies (SPD) sees the measures as a potential growth engine, but points out the need to avoid negative effects on states and municipalities. Rhineland-Palatinate also supports the initiative, but demands a fair distribution of the financial burden and compensation for the increasing expenditure of the federal states. Thuringia's Prime Minister Mario Voigt (CDU) makes it clear that those ordering the measures would also have to bear the costs.

The upcoming tax losses resulting from the “investment booster” will affect the federal, state and local governments. Various relief measures are planned for the years 2025 to 2029, including 2.5 billion euros in the current year and increasing to 11.3 billion euros in 2029. This is seen as a step to increase investments in Germany to around 110 billion euros.

Cooperation between the federal and state governments

Despite the concerns, there is common ground between the federal and state governments focused on combating ongoing weak growth. Particular emphasis is placed on the need to allow investments that would otherwise not take place. However, it is criticized that two thirds of the tax losses have to be borne by the federal states. An agreement in the Federal Council is essential for the adoption of the “investment booster”.

The bill will be discussed in the federal cabinet on Wednesday, as state premiers continue to push for all parties involved to take responsibility for the costs incurred. It therefore remains to be seen how the political debates will be influenced and whether the targeted measures can actually bring about the hoped-for revival of the economy.

For more information on the details of the “investment booster” you can read the reports from Forward and ZDF today read.