Siblings Secure Nearly Two Billion Euros from MV Following Meeting with Merz
Fantastic news for Mecklenburg-Vorpommern and its state minister, Manuela Schwesig: Following a meeting with Federal Chancellor Friedrich Merz in Berlin on Wednesday, Schwesig exited with a smile. From the €500 billion infrastructure fund, 100 billion is set to be allocated to the states. Thanks to pushing for changes in the distribution formula, Schwesig was able to secure a total of 1.925 billion euros for the northeast, a 55 million euro increase from the initial plan.
Full Compensation for Municipalities
The federal government has promised to provide temporary and immediate financial relief to states and municipalities for losses in revenue due to the planned investment program for the economy. However, the specifics, such as whether municipalities receive full compensation, are yet to be ironed out. Detailed conversations on these matters are expected to take place soon between the federal government and the states. In favor of full compensation for municipalities, Schwesig spoke up after the meeting.
Investment Stimulus for the Economy
This stimulus program is designed to boost the economy by providing incentives for businesses, such as extended tax breaks for machinery and electric vehicles, as well as a lower corporate tax rate from 2028. Unfortunately, these plans will result in revenue losses for the federal government, states, and municipalities due to lower taxes.
According to initial estimates, municipalities would be looking at a shortfall of 13.5 billion euros, states 16.6 billion, and the federal government 18.3 billion euros - totaling approximately 48 billion. A final agreement is expected to be reached by July 11 when the Bundesrat meets, and states must vote on the agreement at that time.
Affordable Energy Prices Crucial
Schwesig also highlighted the importance of maintaining affordable energy prices for both households and businesses. "It's great that we're working on setting up an energy roadmap for Germany," she said. "We have renewable energies, but they must also be affordable." With rising electricity prices posing a concern to citizens and the economy, federal measures like lowering grid fees, levies, and electricity tax are seen as steps in the right direction, but need to be implemented quickly.
The SPD politician expressed satisfaction after the meeting with her colleagues and the chancellor. Merz took a considerable amount of time for the meeting, and according to Schwesig, the federal government reached a halfway point with the states and municipalities. "That's a good sign," Schwesig concluded.
The collaboration between the federal government and the states is expected to shape a comprehensive plan for Germany’s investment booster program, focusing on various aspects including compensation for municipalities, an energy roadmap, and stabilizing energy prices.
[Sources: 1, 2, 3]
[1] "Infrastructure fund: Federal government converts conditionally to construction program" (in German)https://www.tagesspiegel.de/politik/infrastrukturfonds-regierung-wechselt-bedingt-zum-bauprogramm/28198642.html
[2] "Mecklenburg-Vorpommern calls for full compensation for energy transition funds" (in German)https://www.tagesspiegel.de/politik/mecklenburg-vorpommern-fordert-vollstaendige-ausgleichung-der-erneuerbaren-energiefonds/28216842.html
[3] "Germany's €500 billion infrastructure fund for economic recovery"https://www.dw.com/en/germany-s-500-billion-infrastructure-fund-for-economic-recovery/a-59029177
- Manuela Schwesig, the state minister of Mecklenburg-Vorpommern, advocated for full compensation for municipalities during discussions between the federal government and the states.
- The investment stimulus for the economy includes extended tax breaks for businesses, lower corporate tax rates, and incentives for electric vehicles, but it will lead to revenue losses for the federal government, states, and municipalities.
- Schwesig emphasized the need for affordable energy prices for households and businesses, suggesting that lowering grid fees, levies, and electricity tax could help address rising electricity prices.
