BERLIN: The German cabinet on Wednesday approved a four-year, 32 billion euro ($34.77 billion) tax cut package designed to reignite growth in Europe’s faltering economic giant, including a subsidy to cover 15% of the cost of companies’ green investments.
The measures, which must still pass the German parliament and win the states’ approval, are a much watered-down version of the three-way coalition government’s initial plan for write-offs that would also cover the cost of investments in digital infrastructure.
The tax cuts, at around 7 billion euros a year, are modest in the context of a 4 trillion euro economy, and economists and business associations have criticised them for not going far enough.
Other benefits for firms include more generous depreciation write-down opportunities.
The package, backed by liberal finance minister Christian Lindner, was initially due to pass two weeks ago, but was blocked by Greens family minster Lisa Paus, who wanted billions for a new comprehensive child support package. This, too, was passed in scaled-back form on Monday.
The German economy stagnated in the second quarter, showing no sign of recovery from a winter recession and cementing its position as one of the world’s weakest major economies.
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