A clash between greens and liberals paralyzes a law in Germany that encouraged tax cuts

The first meeting of the Government of Germany after the summer break was planned, among other things, to launch a series of measures to help companies at a delicate moment in the economy. After going into recession, Europe’s largest economy is struggling to regain momentum. However, the appointment of the coalition Executive – made up of social democrats, environmentalists and liberals – did not reach an agreement. Although the Executive branch carried out a regulation to support start-ups (newly created companies with technological ties), it did not reach an agreement to approve the Growth Opportunities Law, a series of tax reductions for the industry that provided tax relief in 2025 , 2026 and 2027 for an amount of 7,560, 9,380 and 6,500 million euros, respectively, according to a draft of the standard to which Reuters has had access.

The Minister of Family, Senior Citizens and Youth, Lisa Paus, of Los Verdes, has refused to support the proposal. The origin of the disagreement is an endowment for children: in 2025 the so-called Basic Aid for children will come into force, which seeks to group services such as child benefits. It also tries to make them more accessible to increase the beneficiaries. The Family Ministry estimates the minimum investment required at 12,000 million euros. However, from the Treasury, commanded by the liberal Christian Lindner, it was considered sufficient to contribute 2,000 million euros in 2025 for this support for children and the same amount for the following two. A lower amount than the one that the head of the Treasury himself had mentioned a few months ago, which estimated the investment between 2,000 and 3,000 million euros.

“It is unfortunate that a Cabinet decision was not possible today, despite the agreement with the Ministry of the Economy,” Lindner told the DPA agency, referring to the approval that the Minister of the Economy, Robert Habeck, “also from Los Greens—had given the norm. “All social spending needs a solid economic base; families with children also need good jobs”, Lindner has defended. “The structural conditions of the German economy must be improved and investments must be made more attractive. Germany needs to grow again ”, she continued.

The Growth Opportunities Law, in addition to tax reductions, encouraged investments that are respectful with the environment, especially with the climate, as well as research and facilitated the amortization of some assets.

“The Greens’ infighting is preventing essential economic stimuli that Germany urgently needs in the current difficult situation,” said Bijan Djir-Sarai, General Secretary of the Liberals. “Mrs. Paus is playing with social issues against our economic power. This is beyond dishonest and hurts our country as a whole, both businesses and individuals. I hope that this blocking attitude will be dropped immediately and that the Growth Opportunities Act can finally help improve the economic situation in Germany,” added Djir-Sarai. Despite the blockade this Wednesday, the project defended by the liberals will be discussed again at the end of August, at a coalition meeting that will take place in the Messeberg castle.

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