The ruling party has drafted a proposal to restructure the economy
Germany’s ruling party, Chancellor Olaf Scholz’s Social Democrats (SPD), has prepared an initiative aimed at restructuring the economy in order to tackle the cost-of-living crisis and enforce the redistribution of money within the country, RND news outlet reported on Monday, citing a draft economic policy proposal for the party conference in December.
According to the report, the party wants to reform the regulations by placing a temporary ‘crisis tax’ on the country’s top earners in addition to those they already pay.
At the same time, they plan to reform the inheritance and gift tax regulations, so that the ‘super-rich’, multimillionaires, and billionaires contribute more than those with lower incomes. The move is expected to cut taxes for 95% of the population but still boost tax revenues, which the party offers to invest in education.
The SPD has also proposed forming a state fund to activate private capital and create an annual investment volume of €100 billion.
Furthermore, the party is calling for a reform of the debt brake. This mechanism for limiting public debt means that the country cannot take on debts worth more than 0.35% of its annual GDP, but allows exceptions in crisis situations. It was suspended during the Covid-19 pandemic, but was later reinforced after the outbreak was contained. The party wants to amend the brake, as in its current form, it “slows down the necessary change.” Reforming the mechanism, the party believes, will allow additional investments in infrastructure, climate protection, digitalization, and education.
Among other proposed measures are an increase to the minimum wage, making provisions for a reduction in working hours without wage losses, and cutting energy prices by introducing “an industrial electricity price.”
Ultimately, through the proposed measures, the SPD wants to ensure the creation of 1 million new jobs in Germany by 2030. According to the report, the draft proposal may be included in the SPD’s 2025 election campaign.
“Germany has become too complicated, too expensive, too slow in many areas,” the party is cited as saying in the document.
The German economy has been weakening for months now. It officially slipped into a technical recession in the first quarter of the year amid soaring inflation, higher interest rates, and challenges in its manufacturing sector due to higher energy costs. While the next quarter saw a modest 0.1% expansion, GDP lost the gains by shrinking 0.1% in the third quarter of the year. Last month, Deutsche Bank CEO Christian Sewing warned that the economy risks becoming known once again as the ‘Sick Man of Europe,’ as was the case in the late 1990s, if Berlin does not pass structural reforms.
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November 06, 2023 at 08:50PM