Can Germany succeed in the digital and climate transformation without modernising the debt brake? Proposals include investment promotion companies. In the Handelsblatt, Michael Thöne cautions against this path. Such ancillary budgets undermine parliamentary control rights and set the wrong example for Europe. Most importantly, they do not function for the most important investments for the future, he explains in a Twitter thread.
From local authorities to the EU, all levels of government need to become more resilient against crises. Decisive from a fiscal point of view: Who insures whom? Who bears the initial responsibility, who shoulders the burden later on? In FiFo Discussion Paper21-1, Michael Thöne argues that resilient federal finances must provide answers for acute crises such as Corona and also for chronic crises such as climate change - albeit very different ones.
In the annual finance equalisation law GFG 2022, important levers are turned; but much remains the same old story. In the hearing of experts, Michael Thöne stressed that the funding woes of municipalities in North Rhine-Westphalia can hardly be solved if everything is merely treated as a horizontal urban-rural problem. Vertical perspectives are omitted. Corona aid to the municipalities is only granted in the form of undetermined credit. Also, the entire vertical fiscal balance between the Land and the municipalities has not been examined in detail for decades... Honi soit qui mal y pense.
See the FiFo statement here.
The Municipalities need financial security independent of revenue shortfalls and power games in the Länder parliaments. This can only be guaranteed by a clear orientation towards real needs. Michael Thöne discusses the ongoing paradigm shift towards more balanced, objective municipal fiscal equalisation with Jörg Berres, President of the Rhineland-Palatinate Court of Audit, and Patrik Kraulich, Head of Department in the Hessian Ministry of Finance. Moderated by Ulrich Keilmann, Director at the Hessian Court of Audit. Watch the (German) video of the online event of the "Behörden Spiegel" here.