Companies lament German coalition row over tax relief for climate investments

An internal government coalition row over a new “growth opportunities act” is causing a stir among business leaders in Germany, newspaper Handelsblatt reports. The act, proposed by finance minister Christian Lindner, would come with tax rebates, investment premiums and write-off options, totalling six billion euros, for the sustainable transformation of companies. Adoption of the act has been delayed as family minister Lisa Paus, of the Green Party, vetoed the law in protest of plans to fund the act while at the same time limiting additional funds for a social security payment scheme for children. Lindner, from the pro-business FDP, said cuts to various government funding programmes are necessary to offset the growth opportunities act. “Postponing the growth opportunities act again demonstrates the lack of capacity and responsibility in our current government,” Claudia Gugger-Bessinger, manager of industrial company MN, told Handelsblatt. Head of regional industry association Unternehmer NRW, Arndt Kirchhoff, also criticised the government for the row at a regional business convention (Unternehmertag NRW) with chancellor Olaf Scholz. He said the row is putting the entire country’s competitiveness in jeopardy, while bureaucracy, slow licensing procedures and other red tape are stalling the economy. “Mr chancellor, make everyone see sense,” said Kirchhoff. Michael Vassiliadis, head of industry labour union IG BCE, said the family minister and the finance minister are debating two issues that are not at all connected. “This won’t help anyone and impairs our country,” argued Vassiliadis.

Responding to criticism at the business convention, Scholz answered that the law will be made “a bit more pleasant here and there,” adding that an agreement is still within reach in August. In an interview with the Frankfurter Allgemeine Zeitung, Lindner said Paus’s fellow Green Party minister Robert Habeck, who heads the economy ministry, supports the law. “Nevertheless, it’s been stopped by the Greens for unrelated reasons. I hope for a quick resolution,” said Lindner.     

The German government has been grappling with a string of disputes related to climate and energy policies, which was exacerbated by Russia’s war on Ukraine and the energy crisis setting in shortly after the three party-coalition formed a new government in late 2021. Challenges related to the energy crisis and the lost access to cheap Russian fossil fuels, inflation and costs related to the energy transition - such as the switch to more climate-friendly processes - all are weighing on Germany’s prized heavy industry as the country battles with one of its most difficult economic situations in the past two decades.