By Holger Hansen and Christian Kraemer
BERLIN (Reuters) – Germany’s ruling coalition on Wednesday passed legislation to foster the growth of start-ups but failed to agree on a second law offering wider corporate tax relief worth billions of euros aimed at reviving growth in Europe’s largest economy.
At a cabinet meeting, Chancellor Olaf Scholz’s government passed the Future of Financing Act, to make it easier for companies to access capital markets and also improve their ability to attract skilled workers.
According to a draft seen by Reuters, the law increases the tax allowance for employee share ownership to 5,000 euros ($5,458) from 1,440 euros, as a way of helping start-ups attract talent when they are not able to offer high salaries.
But the cabinet failed to agree on passing the Growth Opportunities Act as wrangling in Scholz’s three-way coalition, comprised of his Social Democrats, the Greens and liberal Free Democrats (FDP), continued.
According to sources, the talks stumbled on demands by the Minister of Family Affairs Lisa Paus, of the Greens party, to raise spending on child support in tandem with giving more tax benefit to companies.
Her ministry could not immediately be reached for comment.
“Germany needs growth again. The structural conditions for the economy must be improved & investments must become more attractive. It is therefore regrettable that a cabinet decision on the #Growth Opportunities Act … was not possible,” Finance Minister Christian Lindner wrote on social media.
“Everyone should know that all social spending needs a strong economic foundation. Families with children also need good jobs,” he added in apparent reference to the demand from the Greens.
The disagreement prompted Lindner to abruptly cancel giving a press conference to present the law.
According to a draft seen by Reuters, the law envisages tax relief of 7.56, 9.38 and 6.5 billion euros respectively in the years 2025, 2026 and 2027.
It also gives incentives to companies to make climate friendly investments, provides tax incentives for research and allows companies to offset more losses against profits from other financial years.
The law was designed to boost growth at a time when the economy is struggling to regain momentum after falling into recession.
According to sources, the coalition will carry on discussions on the Growth Opportunities Act and aim to have an agreement in place by the end of August.
($1 = 0.9160 euros)
(Reporting by Holger Hansen, Christian Kraemer, Andreas Rinke; Writing by Matthias Williams; Editing by Alison Williams)
