Criticism of the investment package
Tax plans with side effects: Bundesrat warns of billions burden for states and municipalities
On June 13, 2025, the Federal Council took a position on the planned immediate tax investment program. While the planned measures to strengthen the business location are generally welcomed, there is clear criticism of the financing from the federal states.
Growth targets welcomed – but who bears the costs?
The idea of boosting investment through tax relief is expressly supported by the Federal Council. However, according to calculations by the federal government, around two thirds of the expected tax revenue shortfall will fall to the federal states and local authorities. This equates to more than 30 billion euros by 2029.
In view of the already tight budgetary situation, the Federal Council warns against further restricting the municipalities’ ability to act. Public investment and municipal services of general interest could be seriously jeopardized as a result.
Clear demand: equalize financial burdens
The Federal Council calls on the federal government to jointly agree on financial compensation. It also recalls that the coalition agreement expressly provides for the strengthening of municipal finances. This goal must also be reflected in the legislative process. The principle of causation connectivity should also be consistently adhered to in all legislation.
Already read?
In our article Turbo for investments we have already summarized the central contents of the immediate investment programme. It is now clear that the path to implementation will be politically more challenging than expected.
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