Getting a Break for Businesses - Minister Reiche Explores Lower Taxes on the Table
Street Talk Berlin
Pressure mounts for a political alliance to accelerate economic growth
The economic strain is forcing the fresh government to snap into action and offer businesses the relief they've been craving. "We need to take swift action and introduce measures that'll help keep wage costs steady by the autumn," insisted Rainer Kirchdörfer, a board member at the Family Businesses and Politics Foundation, during a recent conference in Berlin. Kirchdörfer is particularly pushing for a law to limit the rise in contributions to social insurance.
To lighten the load on employers and employees, some innovative proposals have surfaced:
- Digital, user-friendly, and portable pension schemes tailored for small and medium-sized enterprises (SMEs) and lower wage earners, making pension participation accessible and affordable with minimal additional costs. The idea is to provide an alternative — or supplement to — statutory pensions, relieving some pressure on social insurance contributions.
- Automatic enrollment into pension plans, giving employees the option to opt-out and offering regular reenrollment cycles, to raise pension coverage while maintaining low costs for businesses. Additionally, a state-sponsored default fund with features like default contributions and portability is suggested to support SMEs and lower income workers.
- Mandatory employee-employer pension schemes that establish clear rules on contribution-sharing, have garnered support from labor unions, as they aim to broaden pension coverage and keep costs manageable for businesses.
Yet, some employers remain apprehensive about forced auto-enrollment measures, expressing concerns over potential infringement on employee choice and the challenges posed by implementation.
Minister Reiche has not explicitly declared any plans to reduce or cap social insurance contribution rates for businesses. Instead, the focus appears to be on refining pension structures to make them more complementary to social insurance and thereby easing some of the financial burden on employers indirectly.
In light of the proposed measures to alleviate business strain, Minister Reiche is exploring ways to adjust finance-related aspects, such as pension schemes, rather than lowering taxes on businesses directly. To support businesses, digital, user-friendly, and portable pension schemes specifically tailored to SMEs and lower wage earners are being considered, which may eventually contribute to less pressure on business-related finance issues.
