The German government is facing increasing scrutiny over proposals to accelerate corporate tax cuts and implement unconventional economic stimulus measures, with prominent voices cautioning against potentially damaging consequences. Achim Truger, a member of the German Council of Economic Experts (Sachverständigenrat Wirtschaft), has strongly criticized the suggestion, championed notably by Bavarian Minister President Markus Söder, to bring forward the planned corporate tax reduction scheduled for 2028.
Truger’s warning, published in the Redaktionsnetzwerk Deutschland, dismisses the idea as a “total folly” arguing that the resulting economic boost would be minimal and overshadowed by significant fiscal risks. He specifically cautioned that a premature tax cut would necessitate drastic, counterproductive cuts in public spending, ultimately hindering economic growth rather than stimulating it. “It should be categorically avoided” he stated.
The critique extends beyond tax policy, with Truger expressing skepticism regarding proposals from employer associations to eliminate a public holiday in a bid to invigorate the economy. He dismissed the notion that such a measure would yield substantial results, highlighting the methodological difficulties in accurately factoring such changes into economic forecasts – a practice not widely adopted internationally. Furthermore, Truger pointed out that the current economic climate is defined by insufficient demand, rendering the measure largely ineffective.
His observations were particularly pointed regarding Bavaria, a region already boasting a significant number of public holidays, yet not demonstrating a weaker economic performance compared to other German states. The remarks reflect a growing debate within Germany regarding the appropriate approach to stimulating the economy, with concerns rising that politically motivated quick fixes could exacerbate existing fiscal vulnerabilities and ultimately prove detrimental to long-term growth. The Council’s stance underscores the need for a more cautious and considered approach to economic policy, prioritizing stability and sustainable growth over short-term political gains.
