Germany’s ruling party, Chancellor Olaf Scholz’s Social Democrats (SPD), is proposing an initiative to restructure the country’s economy in order to address the cost-of-living crisis and promote wealth redistribution, according to a draft economic policy proposal reported by RND news outlet.
The SPD aims to reform existing regulations by implementing a temporary ‘crisis tax’ on top earners in addition to their current taxes. Additionally, they plan to revise inheritance and gift tax regulations to ensure that the super-rich, multimillionaires, and billionaires contribute more than those with lower incomes. These measures are expected to reduce taxes for 95% of the population while increasing tax revenues, which the party plans to invest in education.
Furthermore, the party has proposed the creation of a state fund that would mobilize private capital and generate an annual investment volume of €100 billion. This fund would support various sectors and initiatives, further boosting the economy.
In addition, the SPD is calling for a reform of the debt brake, which limits public debt to 0.35% of the annual GDP, with exceptions during crisis situations. The party argues that the current mechanism impedes necessary changes and aims to amend it to allow for increased investments in infrastructure, climate protection, digitalization, and education.
Other proposed measures include increasing the minimum wage, implementing provisions for reduced working hours without wage losses, and reducing energy prices through the introduction of an industrial electricity price. These measures collectively aim to create 1 million new jobs in Germany by 2030, according to the SPD’s draft proposal.
The party states that Germany has become too complicated, expensive, and slow in many areas, and the proposed reforms are intended to address these issues and revitalize the economy.
The German economy has been experiencing a slowdown for months, as it officially entered a technical recession in the first quarter of the year due to soaring inflation, higher interest rates, and challenges in the manufacturing sector caused by increased energy costs. Although there was a modest 0.1% expansion in the following quarter, the GDP contracted by 0.1% in the third quarter. Deutsche Bank CEO Christian Sewing warned that without structural reforms, the German economy risks being known again as the ‘Sick Man of Europe’ as it was in the late 1990s.
It is anticipated that the SPD’s proposed measures will be a key component of their 2025 election campaign.
For more stories on the German economy and finance, visit RT’s business section.
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