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The reformed property tax is in force since 2025. North Rhine-Westphalia and two other Länder allow their municipalities to apply a lower tax rate to residential properties than to commercial properties. As a result, it is no longer possible to use the previous method of taking equal account of property tax revenue in municipal fiscal equalisation. However, fears that a new method would be complicated or that property tax B would even have to be removed from the financial equalisation system are unfounded. In FiFo Report No. 35, Eva Gerhards and Michael Thöne show that the new ‘one for all’ method actually makes this possible in a simple, efficient and equitable manner. The study also recommends a solution for the optional property tax C on vacant, ready-to-build-on land.
Many cities and municipalities are very active in the fight against climate change. But why? In an article on municipal climate protection in the just-published issue 1/25 of the Journal of Environmental Policy and Law (ZfU), Thomas Döring and Michael Thöne analyse this observation which is, at first glance, counterintuitive from a fiscal federalism perspective. On closer inspection, however, these activities are as economically well-founded as they are necessary – not least in view of the growing importance of municipalities as climate protection actors at the international level.
21.02.2025 - The European Commission has outlined the five reform objectives for the EU's future budgets and medium-term framework. The sixth objective, a bigger EU budget, is the proverbial elephant in the room. At a workshop of the European Committee of the Regions, Michael Thöne outlines how a stronger focus on European public goods could be organised and financed in an ever more federal EU. Many questions remain to be answered, not least the future role of traditional EU tasks such as cohesion policy.
10.02.2025 - The city council of Cologne is discussing the introduction of a local tax on disposable packaging for food and beverages intended for immediate consumption, based on the Tübingen model. The aim is to make reusable packaging more attractive and reduce litter on Cologne's streets. In an interview with WDR television, Michael Thöne predicts that such a levy would have a positive, albeit moderate, incentive effect. What is missing on TV: The levy should first and foremost be seen as a small tax, which in Cologne could generate an estimated 10 million Euros per year, but would also result in a sizeable administrative burden for the catering industry and the city.
04.02.2025 - The financial distress of German municipalities is closely linked to the upcoming federal elections. But it is not primarily a question of money. Rather, the central level should more often take responsibility for its own tasks instead of passing them on to the municipalities. In conversation with WDR, Michael Thöne stresses the need for structural reforms of social services with a view to municipalities. Municipalities must be able to focus more on their often neglected obligations in providing core local services. And the governance of an effective and efficient social policy cannot be reduced to the distant delegation of tasks without functioning connectivity. Modernising government also requires a continued development of the federal division of public tasks.