Germany's proposed corporate tax cut should release a backlog of investment and create jobs in Europe's largest economy, the head of Germany's BDI industry association believes. "The corporate tax cut will free investment for many corporations and create jobs," BDI President Juergen Thumann told German magazine Focus in an interview released at the weekend.
"Many businessmen and managers have told me that they will steer their investment to Germany if the agreed reforms become reality," Thumann continued, adding the investment backlog totalled billions of euros and that industry was looking for a positive signal.
However, Thumann said there was an urgent need for further reforms, such as a comprehensive overhaul of the entire tax system.
Volkswagen chief executive Bernd Pischetsrieder meanwhile told Welt am Sonntag newspaper that a corporate tax cut alone was not sufficient and would not sway investment decisions.
Chancellor Gerhard Schroeder's package of new measures, including tax cuts and spending on infrastructure, has received a mixed reception since it was announced to parliament on Thursday.
The opposition conservatives have agreed in principle to the idea of cutting taxes, notably corporate tax, although they have criticised the government's plans to find the seven billion euros ($9.40 billion) to finance the reductions.
The cost to the federal government should be around three billion euros. Finance Minister Hans Eichel, in comments to Welt am Sonntag, repeated his ministry's view that the changes would be fully funded. He added the corporate tax cut to 19 from 25 percent should take effect from January 2006.
He commented that the two billion euro transport infrastructure plan would also not lead to new borrowing.
Transport Minister Manfred Stolpe opened the way on Sunday for private investment in German highways. In a commentary in Bild am Sonntag, he said one billion euros would be invested in five pilot projects from this year, guaranteeing 30,000 jobs.
Union and left-wing leaders, meanwhile, have called for investment programmes of 10 to 20 billion euros, saying the sums the government have put forward, while in the right direction, are too small.
Comments
Comments are closed.