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Municipalities have been greatly affected by the effects of the corona pandemic. In particular, business tax revenue has collapsed. Therefore, the Bundestag wants to help with billions and has amended the Basic Law for this.
In view of the crisis in the Crown, the Bundestag has decided to bring great relief to the municipalities. For one thing, the federal government is offsetting billions in business tax losses this year. On the other hand, it participates more strongly in the costs of accommodation and heating of the beneficiaries of Hartz IV.
An amendment to the Basic Law was resolved for both measures. This required a two-thirds majority and, therefore, the votes of the opposition. The Greens and FDP had already voiced their support for the project before the vote. The Federal Council has yet to approve the discharge, this is scheduled for Friday.
Municipalities should still be able to invest
Due to the enormous consequences of the Crown crisis, the trade tax has collapsed as the most important source of revenue for municipalities. Compensating for these revenue shortfalls this year will cost the federal government € 6.1 billion and the states € 4.8 billion.
The billions are intended to prevent municipalities from being able to invest more, which in turn would have huge consequences for construction and crafts, because cities and municipalities award many contracts. In order for the federal government to be able to offset losses in business tax, an amendment to the Basic Law was necessary, specifically a one-time exemption for 2020.
The largest long-term share of the federal government in the cost of accommodation with basic security for jobseekers costs around 3.4 billion euros per year under the law in the medium term. For this, too, the Basic Law had to be changed, since the federal government could previously contribute a maximum of 49 percent of the national expenses for accommodation and heating. This is now possible up to a 75 percent limit.
East German states receive support for supplementary pensions from the GDR
In addition, the federal government relieves the new federal states from the costs of supplementary pensions from the RDA. In the future, you will bear 50 percent of the costs instead of 40 percent. The rest of the East German states carry the rest. This is aimed at improving your financial margin.
Many people receive money from the RDA’s supplementary and special pension systems. Former employees of the army or police, as well as educators, engineers, scientists or doctors, for example, have the right. Unlike the regular pension, it is not funded by pension insurance, but by the state: the federal government has paid 40 percent of supplementary pensions and the states 60 percent.
The suspension of the obligation to declare bankruptcy has also been extended until the end of the year
The Bundestag has also approved a new suspension of the obligation to declare bankruptcy due to the crisis in the crown. Consequently, the obligation to file for bankruptcy will be suspended until the end of the year. Until now, the exception rule should expire at the end of September. The goal of the grand coalition is to continue to provide companies with the opportunity to restructure and finance themselves by taking advantage of government assistance and in the context of out-of-court negotiations. However, the additional suspension should only apply to companies that are over-indebted due to the pandemic but are not insolvent.
