Germany’s new government launches a plan to encourage investment and boost the economy
BERLIN (AP) – Germany’s new government on Wednesday launched a package of tax breaks and ultimate tax cuts for companies to encourage investment as it tries to bring new momentum to a shrinking economy over the past two years and is expected to stagnate this year.
Friedrich Merz’s cabinet prime minister approved the so-called growth boost plan, which still has to be passed by lawmakers. Its central part is a substantial tax relief for investment in machinery and other equipment over the next three years, followed by a gradual reduction in corporate tax rates from 15% to 10% between 2028 and 2032.
Companies that buy electric vehicles and measures to encourage research investments will also have tax breaks over the next 2½ years.
“We are making Germany a more competitive international location,” said Finance Minister Lars Klingbeil, who also has the largest economy in Europe.
Some industry associations have called for more help, such as lowering electricity prices.
The package launched on Wednesday separates the Merz coalition that pushed 500 billion euros ($570 billion) in Parliament, before even taking office last month to dump money into the squeaky infrastructure for the next 12 years.
Clinbel said the government plans to officially launch the fund in late June.
