Bavarian state elections / Coal versus diesel
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May 20, 2019
Good morning,
dear reader,
+  Germany’s billion-euro tax cuts  +  Bavarian state elections  +  
Coal versus diesel
A weak economy, fear of a trade war and rising taxes: The mood on international stock exchanges could hardly be worse. Shareholders worldwide have started a sell-off and investors are buckling up for a rough ride.
The epicenter of this market disruption lies in the US, where President Donald Trump has missed out on what could have been a boost to the economy with his historic tax reform. Now shortly before US mid-term elections in November, doubts are growing about the economic upturn the former reality TV star bought himself.
Meanwhile, German businesses are hoping for better news: Tax relief worth billions from the German government. Economics minister Peter Altmaier has been busy preparing a new fiscal program that has now been revealed. Among the most important points are the abolition of Germany’s so-called solidarity tax and new rules around corporate depreciation. Bottom line: Corporate Germany could be saving as much as €20 billion. It’s a positive thing that the government is considering more than just handing out bigger social welfare payments, and is also actively thinking about how best to promote economic growth. Even amateur economists know that you have to make it, before you can give it away.  READ MORE  
And local businesses won’t care that Altmaier isn’t actually the Cabinet member responsible for making decisions about taxation. The country’s finance minister, Olaf Scholz, has previously suggested similar corporate tax reform during an interview with this newspaper – so he cannot exactly see Altmaier’s plans as an affront. His own ideas appear to have been duplicated by another government department. Typical of this coalition government, you might say: Altmaier is a member of Angela Merkel’s Christian Democratic Union and Scholz is a Social Democrat.
It’s common practice for politicians from different parties to criticize one another openly. It’s not as common in business circles. Perhaps that is why there was such an uproar about comments made by VW boss Herbert Diess about the situation in Hambach, where power company RWE has been fighting with environmental activists over plans to clear an ancient forest, so they can expand their brown coal mining operations.

“We’re investing millions in electrifying cars,” Diess said. “But then we see an expansion of brown coal generation, the most climate-damaging fuel of all.”

RWE was not happy with Diess’ comments and promptly invited him to come and see one of their mines. But the VW boss is right: Banning diesel vehicles and pushing for e-cars doesn’t exactly go with powering homes and businesses with brown coal, particularly as one could negate any benefits brought about by the other. As the writer Oscar Wilde said: “If one tells the truth, one is sure, sooner or later, to be found out.”  
Anyone following German politics has an interesting weekend coming up. At around 6 pm on Sunday evening, we will get the first results of the state elections in Bavaria. According to all polls, the Christian Social Union, or CSU, are going to lose their absolute majority there. But the ugly-looking polls are not necessarily a bad thing for the CSU’s Bavarian premier Markus Söder and CSU head Horst Seehofer. At least they have some time to think about who, and what, they can blame on Sunday night. Victories result in grand speeches, losses lead to excuses.

Wishing you a relaxing weekend,
Sven Afhüppe
Handelsblatt Editor-in-Chief
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