German Finance Minister: We Will Grow out of Debt, But We Will Also Tax the Rich

12 May 2021

By David Barwick – Frankfurt (Econostream) – German Finance Minister Olaf Scholz on Wednesday said that Germany would grow its way out of the debt incurred to deal with the crisis, but would also tax those who earn very well.

In an interview with German daily Rheinische Post, Scholz said that the €450 billion in new debt incurred by Germany to counter the crisis was ‘well invested’, as it saved hundreds of thousands of companies and more than three million jobs.

‘And we have been careful with taxpayers' money’, he said. ‘After this crisis, we will have less debt in relation to our economic strength than all the other G7 countries had before this crisis. If we are smart about it, we will meet all the stability criteria again by the end of the decade. We will grow out of debt just as we did after the financial crisis.’

‘But it is also clear that now is not the time when top earners, millionaires and billionaires, should expect tax cuts’, he added. ‘We want to ease the burden on smaller, middle and normal incomes. In return, we want to make those who earn very, very much money pay a little more.’

Asked why tax increases were needed if Germany could grow its way out of debt, Scholz replied, ‘The next few years will be a challenge. The laws of mathematics can hardly be undermined. The pandemic has shown how important a reliable and solidly financed welfare state is. At the same time, we must maintain the high level of investment in the budget to make our country fit for the future.’

As for the Covid-19 crisis, ‘many indications’ suggest that it will be ‘largely overcome’ in the summer, at which point ‘economic growth will pick up again’, he said. ‘That is already becoming apparent.’

As a result, the German government can sharply curtail new debt, he said. ‘What is important to me for this year is that we must extend short-time work and bridging aid for companies until the end of the year.’

Scholz repeated his conviction that by the end of May it would be possible to give Germans clarity about what would be possible with regard to summer holidays.

‘In my view, there is much to suggest that thanks to the growing pace of vaccination and the falling infection figures, holidays will at least be possible again at home and in some other countries’, he said.