Bavaria has state fiscal equalization audited

Bavaria has state fiscal equalization audited

He had immediately given his ministry the task of working out a model in which the current financial equalization system would be abolished and replaced by "a kind of collection point" administered by the federal government.

Kretschmann had brought up the idea of abolishing the financial equalization system for the federal states. He had suggested that the federal government should be responsible for balancing the budget and should receive more of the joint tax revenues in return. However, even his own finance minister nils schmid (SPD) reacted skeptically. Schmid told the dpa news agency that the proposal would be "politically very difficult to implement". The transfer of fiscal equalization to the federal government, as suggested by kretschmann, would require a constitutional amendment. The bundestag and bundesrat had to agree to this.

Schmid said: "the federal principle is based on the fact that not only the federal government is responsible for the individual states, but that the states are also responsible for each other."The SPD politician is rather counting on convincing the recipient countries of the advantages of a reform of the existing financial equalization system.

North rhine-westphalia’s minister president hannelore kraft (SPD) warned against a creeping hollowing out of the federal system. "One should carefully consider whether one is now prematurely campaigning for the CSU in bavaria by dismissing this necessary equalization as absolutely stupid and calling for the complete abolition of the fiscal equalization between the states," she told the dpa news agency in dusseldorf. "If the countries voluntarily hand over the regulation of their financial relations to the federal government, this weakens the position of the countries and damages federalism in the long run."

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