The Constitutional Court of Schleswig-Holstein has declared the Land's municipal financial equalisation scheme (KFA) unconstitutional in one important respect. Schleswig-Holstein had fundamentally reformed its KFA, which had previously been unconstitutional in many parts, in 2020 on the basis of a FiFo-GGR report. The reform was needed in order to meet the high standard of actual needs-based funding. However, in the financing of central functions, the KFA 2020 resorted to the old solution instead of taking into account the empirical results of FiFo and GGR. According to the current decision, the legislator ought not to have ignored this new scientific "standard of comparison". Here, legal amendments have to be implemented. "Of course, parliaments do not have to adhere to expert recommendations in every detail," states Michael Thöne, "but in the fair allocation of scarce resources according to actual needs, there is little room for political manoeuvring.“

In acute emergency situations such as the corona pandemic or the current energy crisis, the focus of economic policy is on support and rescue. This is primarily the task of the central state. The Länder must support these measures and implement them locally. At the centre of a visionary, evidence-based economic policy of the Länder, however, must lie structural measures aimed at increased immigration, higher productivity and climate neutrality. In this context, as Michael Thöne writes in a statement for the North Rhine-Westphalian parliament, fiscal restrictions and the state's own shortage of skilled staff are forcing the states to also modernise ambitiously.

The "Court of Auditors is having a fit" - this is what Der Spiegel, RND and the Tagesschau report today. Background is the grand evaluation of 33 tax benefits from 2017 to 2019, led by FiFo Köln. Now, in a report to the Bundestag, the Federal Court of Auditors "ultimatively" demands that the Federal Minister of Finance do something to abolish the criticised concessions in the motor vehicle tax, currently worth around one billion Euros. The FiFo evaluation had identified, among other things, the subsidisation of tractors as not very effective and not sustainable. The results of this and other evaluations can be found in the six FiFo reports 28-0 to 28-E.

With limited resources to spend, the municipalities in North Rhine-Westphalia are facing enormous challenges for the future. The investive transformation of NRW's municipalities is the focus of the annual survey, conducted by FiFo Köln with the support of NRW.BANK. Following the presentation of the project at the 17th Finanzmarktforum 2023, the six-week field phase survey of the cities, towns and districts in North Rhine-Westphalia is starting now. The main topics will be investment plans and investment backlogs as well as the challenges posed by climate change and digitalization.

After a long illness, bravely endured and productively resisted, Jens Bullerjahn died on 26 November 2022 at the age of 60. We mourn the FiFo Policy Fellow as an always stimulating co-author, an always demanding sparring partner and, above all, as an always good friend. Rest in peace.

The vehicle tax and the privileged income tax treatment of company cars are central obstacles on the way to fairer and more climate-friendly mobility. A new study by FiFo Cologne and RWI Essen shows the decisive role of the purchase decision for the structure of the passenger car fleet. Based, among other things, on household surveys conducted by RWI, FiFo drafts reform models for both of the central levies that still stand in the way of the transformation today. Now the full version of the study financed by Agora Verkehrswende has been released. 

In addition to the urgent acute crises, Germany is facing five major chronic crises that require transformations. Climate crisis, demographic change, digital transformation, national security and the large backlog of investment gaps - five tasks for the future where a lot of money needs to be spent. Michael Thöne calculates the total volume of all necessary transformations at a conservative 300 billion euros a year. To finance all this, more taxes, more debt or intensive spending cuts are not the cure. The five great transformations call for the sixth transformation, the comprehensive modernisation of the German public sector. The long version of his essay is published in the latest Loccumer Protokoll and as FiFo DP 22-04. The ifo Schnelldienst 09/2022 offers a condensed version.

The FiFo director has already been honoured with the Ruhr Prize for Art and Science of the City of Mülheim an der Ruhr in 2021. Due to the pandemic, the festive award ceremony could only take place now. Following Michael Thöne's laudation in which he praised Klaus Mackscheidt as a scientist and a true Renaissance man, Lord Mayor Marc Buchholz presented him with the Ruhr Prize, the highest honour that Mülheim bestows. Klaus Mackscheidt also signed the Golden Book of his native city.

What experience does Germany have with financing municipalities sustainably? How can an effective system of intergovernmental transfers be established? Organised by GIZ together with Jens Bullerjahn and Michael Thöne, a Mozambican delegation with high-ranking representatives from the Ministries of Finance, Economics and Home Affairs as well as from the municipal authorities travelled for a week through Saxony-Anhalt and the political Berlin. At the Federal Ministry of Finance, the delegation discusses with State Secretary Werner Gatzer (in photo with Onofre Muianga and Michael Thöne). The German Embassy reports on Facebook.