Germany’s crisis-stricken artisan sector and major industry associations are intensifying pressure on the federal government to accelerate planned income tax cuts, arguing that the current economic climate demands immediate action to bolster investment and safeguard jobs. Jörg Dittrich, President of the Central Association of German Crafts (ZDH), told Bild newspaper that reducing the corporate tax burden in a nation often labelled as having the highest rates globally is “correct and urgently necessary”. However, he cautioned against relief measures solely benefiting corporations, emphasizing the vital role of medium-sized enterprises and craft businesses – the backbone of the German economy – in fostering investment, apprenticeships and job creation.
Dittrich’s call highlights a critical flaw in the current tax relief strategy. Approximately 75% of craft businesses operate as personal businesses, meaning they pay income tax, not corporate tax. Consequently, he argues that any conversation around corporate tax reductions cannot disregard the impact on individual income tax payers. A previously agreed-upon income tax reduction, initially slated for 2027, was tentatively approved by the conservative CDU/CSU and SPD parties for implementation around mid-way through the current legislative period. However, businesses contend the timeline is unacceptably slow.
Oliver Zander, Managing Director of Gesamtmetall, the powerful industrial federation, echoed Dittrich’s concerns, unequivocally supporting the recent proposal by the CSU party to expedite these tax reductions. Zander argues that alongside high energy costs, burdensome labor regulations and excessive bureaucracy, the tax burden is a significant deterrent to investment in Germany. This position is further validated by statements released last year by the SPD-led Federal Ministry of Finance, acknowledging the country’s competitive disadvantages.
Beyond the purely economic implications, both representatives suggest accelerated tax relief would send a powerful message of renewed initiative to the German economy. The move would signify genuine progress on crucial structural reforms and potentially herald a “spring of competitiveness” demonstrating that remaining and investing in Germany are worthwhile endeavors. The current political climate necessitates a bolder and more immediate response to revitalize the German economy and prevent further erosion of its competitive edge. The pressure now mounts on the government to reconsider its timeline and deliver a tangible relief package sooner than planned.
