Berlin Baden-Württemberg’s finance minister Danyal Bayaz (Greens) has called on the federal traffic light coalition to adopt a more courageous tax policy. “Unfortunately, the stalemate of the past few years could not be overcome at this point in the coalition negotiations,” said Bayaz in an interview with Handelsblatt. “But a government can also become wiser during the legislature.”
But this is only possible with counter-financing, a moderate increase in the top tax rate. The FDP is not ready for this. “But even a federal finance minister can change his stance during the legislative period.”
Bayaz, who is now one of four green state finance ministers, emphasized how important the field of politics has become for his party. The Greens understood “that finance ministries at federal and state level are key departments in order to be able to implement our goals – investments in climate protection and digitization, more tax justice”.
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For the future, Bayaz recommended that his party should “forego one or the other ideological argument”. He cited the wealth tax as an example. This has the problem that it pollutes the substance of companies, is expensive to collect and brings in comparatively little. “I would recommend using the energy to reform the inheritance tax to make it fairer and easier.”
Read the entire interview here:
Mr. Bayaz, as a first measure, Christian Lindner created a debt-financed reserve of 60 billion euros in order to finance future investments in digitization and climate protection. How satisfied are you with the liberal Federal Minister of Finance?
The SPD, FDP and Greens want to modernize the social market economy digitally and ecologically. Financial policy must do its part to achieve this. I trust that Christian Lindner, as Federal Minister of Finance, will make the agreed projects of the coalition agreement possible. That’s how he promised. The coalition agreement offers a good mix of solidity and a focus on investment. I am satisfied with that.
Half a dozen measures are listed in the coalition agreement as to how additional funds can be mobilized despite the debt brake. What is the debt rule even worth if you want to get around it that way?
The debt brake is a major achievement and it continues to apply. The coalition agreement names a number of ways in which investments can be financed within the existing rules. These are smaller measures, but in their combination they can provide a lot of oomph, to quote a former Federal Minister of Finance. In this way we can finance investments in climate protection that are particularly important to us Greens.
In the FDP there are reservations about many of these measures. Do you really believe that Lindner will take full advantage of them?
Christian Lindner has only been in office for a few weeks. I already have a lot of respect for my own office, but if I put the organizational chart of my ministry next to that of the Federal Ministry of Finance, I would say: I run a good medium-sized company in Baden-Württemberg, Lindner a large international corporation. I think we have to give him and the new government some time to sort things out and approach things systematically.
“We will have to extend economic aid”
Since the start of the new federal government, Corona has dominated events again. Will the traffic light make the promised departure despite the pandemic?
There is the urgent and the important. The fight against the pandemic is the very first task for the federal government. We will certainly have to extend the economic aid and support, from companies to public transport, hospitals and municipalities to vaccination and test offers. That is the urgent matter. At the same time, we have what is important, what is agreed in the coalition agreement: the digital and ecological renewal of the country. We all have to deliver, the federal and state governments together.
“Super write-offs are good tools“
So the black-green state government in Baden-Württemberg will support the traffic lights?
The Federal Council is an important player, especially in financial policy. And there are now four green finance ministers, seven black and five red. We will remind the federal government across party lines that it stands by its promises. Or that measures from the coalition agreement such as super write-offs and loss carry-backs are not unilaterally at the expense of the federal states and municipalities.
Are you ready to do your part with the financing when it comes to the super write-offs?
The super depreciation targeted for investments in digitization and climate protection are good instruments if they are designed correctly. That mobilizes private capital. It would be wrong to believe that the state alone can solve all of this. Baden-Württemberg companies that are very innovative would also benefit from this. We are therefore ready to make our contribution.
Lindner has announced a relief of 30 billion euros for citizens and SMEs in this legislative period. Is he right there?
Yes, we’re heading in the right direction, but that’s not an invention of the new Federal Minister of Finance either. The full deductibility of the pension insurance contributions goes back to the judgment of the Federal Fiscal Court. And the lowering of the EEG surcharge should also compensate for the rising CO2 price. However, it would be easier for me to support this if we saw real relief for lower and middle incomes, counter-financed by a moderate additional burden on top earners. Our leeway has limits. Unfortunately, it was not possible to overcome the stalemate of the past few years in the coalition negotiations at this point. But a government can become wiser during the legislature.
In the Ampel coalition agreement, to the surprise of many, there is also the announcement that municipalities are to be relieved of their old debts. North Rhine-Westphalia, Rhineland-Palatinate and Saarland in particular would benefit from this. Would you still agree?
No, I do not think so. It will very much depend on what the model looks like in detail. As Federal Minister of Finance, Olaf Scholz had proposed a model in which 70 million euros would have flowed to Baden-Württemberg and eleven billion euros to North Rhine-Westphalia. We will not accept that. A model in which only a few benefit and those who have been taking good care of their communities for a long time fall behind, will meet fierce resistance in the Federal Council.
Danyal Bayaz speaks at a session of the state parliament on the state budget for 2022.
(Photo: dpa)
The Greens provide finance ministers in four federal states. In the federal government, your party would have liked to take over the Federal Ministry of Finance. Are the Greens now making financial policy more important?
As the Greens, we aim to address the broad spectrum of society, i.e. to achieve election results of more than 20 percent. That is only possible as a political full-range supplier. We are more than an ecological corrective and work in all areas of politics. In the meantime, this certainly includes financial policy. In addition, we have long since understood that finance ministries at federal and state level are key departments in order to be able to implement our goals – investments in climate protection and digitization, more tax justice.
“The state cannot solve everything”
Anyone striving for election results of 20 percent and more must offer more in terms of financial policy than the demand for tax increases and more debt.
That’s right, and so do we. In my party it has long been understood that the state cannot solve everything. The question of how we can stimulate entrepreneurial investments, how we use capital markets for climate protection – all of this is part of the green agenda. But what is true: in the future we could still do without one or the other ideological argument.
What are you thinking about?
Take the example of the wealth tax, which I’ve never been a fan of. Both the SPD and the Greens had them on their electoral manifestos. However, this instrument never really played a role in the coalition negotiations. Perhaps we will get smarter out of it and simply save ourselves such ideological disputes in the future. And instead concentrate on the realistic things that you can really design with. I would recommend using the energy on inheritance tax reform to make it fairer and easier.
What speaks against the wealth tax?
There is the problem of property taxation. To put it bluntly: If I tax my wealth at two percent every year, then it will be gone after 50 years with no increase in value. In addition, it is a very expensive tax: if my tax officials have to go out every year to record and evaluate assets in private households and companies, it is a lot of effort that brings comparatively little income. A well-designed inheritance tax is a much better alternative: a lower rate, few exceptions and a deferral rule for companies. But that will probably not work in this legislative period.
The coalition agreement provides for a standstill in tax policy. The SPD and the Greens on the one hand and the FDP on the other have blocked each other’s positions. As the lowest common denominator, you simply don’t do anything. Does that fit in with a self-proclaimed progress coalition?
There are some measures, such as depreciation for companies. But unfortunately the coalition agreement does not include the major income tax reform. From my point of view, it would be high time to ease the burden on small and medium incomes. But that is only possible with counter-financing, a moderate increase in the top tax rate. The FDP was not ready for this. But even a federal finance minister can change his stance during the legislative period. I definitely wouldn’t stop him there.
“Now I am in the hot seat myself”
A good six months ago you became Minister of Finance in Baden-Württemberg. How did the change feel?
It took a long time to think about the lever: from Berlin to state politics, from the parliamentary bank to the executive, from the opposition to the government. As a member of the Wirecard investigation committee, I was allowed to keep an eye on the Federal Minister of Finance, now I’m in the hot seat here in Stuttgart. So I can understand very well how Robert Habeck or Christian Lindner are feeling right now.
How come?
It is exciting and also fulfilling to be able to shape politically. But then you have to turn your head for the decisions. When I came to my new office in the ministry after my swearing-in in the state parliament, I found a pile of files on the desk. I opened the first one and it was about corona aid worth millions. Then you put your abbreviation under it in green ink and know: Okay, from now on it counts.
More: Climate protection, citizens’ money, digitization: what exactly the traffic light has agreed on – and how it wants to finance it