German Economy Minister Proposes Scaling Back State Holdings

(Bloomberg) --

Germany's economy minister says tax increases are the wrong way to handle the costs of the coronavirus crisis and proposed selling state holdings instead.

“The value of state holdings has grown considerably in recent years -- that's why we should examine which state holdings can be scaled back,” Peter Altmaier told newspaper Welt am Sonntag. “This will also bring money into state coffers that we can put to good use for future investments.”

The federal government's company holdings range from listed corporations such as Deutsche Telekom AG and Deutsche Post AG, airport operators and railway firm Deutsche Bahn AG, to cultural and scientific institutions and building cooperatives. Germany is also the biggest shareholder in Commerzbank AG.

Tax increases would be “poison for the economy” because Germany already has high taxes, even by international standards, Altmaier said. “We can borrow money at very low or even negative interest rates.”

According to a Spiegel report, Germany is considering another suspension of its constitutional debt brake in 2022. The news magazine cited finance ministry sources as saying just under 60 billion euros ($72.8 billion) in new debt is expected.

He predicted that industrial output will return to pre-crisis levels by the middle of next year and grow 3% or more this year if the pandemic is successfully combated.

“That is the best prerequisite for us to return to the normal level of the debt brake,” Altmaier said.

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