Germany’s Social Democratic Party with Chancellor Olaf Scholz among its members set forth an interesting draft. Policymakers proposed a so-called “crisis levy” that would be charged on well-off Germans as an extra source for the government investment fund.
Notably, Social Democrats suggested that the crisis levy would be valid for a particular term. In other words, the richest Germans would be forced to share some of their fortunes that will be allocated to the new government package. The Social Democratic Party is seeking measures to accumulate an investment fund for economic development.
This fund is one of the proposals included by the party in the 2025 campaign program. These issues will be debated at the Party conference in December. The new crisis levy is expected to encourage investments.
Earlier, the party of Olaf Scholz advocated for reform in the tax policy, in particular, in terms of donation and inheritance taxes. Policymakers anticipate that such amendments will ease the tax burden for 95% of the population. At the same time, the remaining 5% will have to tighten their budgets. The 5% represented by wealthy and ultra-rich Germans will be subject to the new crisis levy.
Policymakers aim to boost private investments worth €100 billion per year. The implementation of this plan will create 1 million jobs by 2030.
Among the proposals on Germany’s economic policy, this crisis levy calls for the reinstatement of Germany’s so-called debt brake which prohibits the government from swelling the public debt by more than 0.35% of GDP annually. Previously, Germany gave up this mechanism during economic upheavals such as the COVID-19 pandemic. However, the government has lately revived this rule. Experts say that the debt brake has to be revised and streamlined for a new reality. Analysts believe that the reforms will enable the government to boost investments in infrastructure, environmental packages, digital programs, and education.
The Free Democratic Party, the smallest party in Scholz’s coalition government, could vote against the proposals of the Social Democratic Party. Earlier, Free Democrats urged the German authorities to stop increasing both debts and spending. Chancellor Scholz told The Economist that Germany did not intend to pump up its debt. Interestingly, the UK-based periodical used to term Germany the sick man of Europe.