BERLIN – Debate over new stimulus package

Germany’s ruling parties remain divided over key parts of the most-recently proposed €80 billion COVID-19 aid package, which aims to stimulate the economy and boost demand.

The issues causing the stir include the minimum wage, corporate tax, assistance for municipalities, and incentives for purchasing cars.

While both parties agree on the basic premise of providing relief to local governments, there are differences in how best to administer the aid.

Core to the SPD’s proposal is the plan to waive the debts of 2,000 particularly indebted municipalities, a package of €57 billion that would then be transferred to federal and state governments.

The CDU/CSU is strongly against this point and has instead proposed a three-pillar model, where the federal government takes over some additional welfare state costs for municipalities, waives some trade taxes and creates a municipal investment programme.

There is also controversy around whether to include traditional combustion engine vehicles alongside electric cars in the €5 billion plan to support new car purchases, which would last until the end of the year and would be graded by emissions.

While both parties in the Grand Coalition are largely against the proposal, key figures in car-producing states, such as Bavarian leader Markus Söder (CSU) support the subsidy.

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