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East German payments 'no longer needed'

The Local · 20 Mar 2012, 08:23

Published: 20 Mar 2012 08:23 GMT+01:00

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The subject is set to be a major one in the campaign for the May election in the country’s biggest state North Rhine-Westphalia, the paper said.

The mayors of many cash-strapped Ruhr-area cities said their eastern colleagues were able to get their budgets in order with money transferred from the west, leaving towns like Dortmund, Essen and Gelsenkirchen cutting public services because they have no money.

“The Solidarity Pact (for the East) is a perverse system that in no way is justified any longer,” Dortmund Mayor Ullrich Sierau, a Social Democratic Party (SPD) member, told the newspaper.

“You can’t explain any more why the poor cities in the Ruhr area have to go into high levels of debt in order to pay their share of the solidarity pact,” he said.

“The East is in the meantime so well positioned that they don’t know where to put their money. At home in the Ruhr area everything is falling apart.”

On Tuesday, Armin Laschet, deputy leader of the Christian Democratic Union in the state's parliament, said the payments had to continue, saying it was important to stick to the agreement as it provided a basis for planning.

Laschet told Deutschlandfunk radio that one could only discuss dealing with the payments in a different way after 2019. In the long-term one should not spend money "according to geography" but according to need.

The current solidarity pact runs from 2005 until 2019 and provides the east German states with €156 billion in financial help. Federal, state and local governments must all pay into the fund regardless of their financial situation, the paper wrote.

Local finances across North Rhine-Westphalia are in a terrible state. Only eight of the 400 municipalities in the state have a balanced budget.

The city of Essen, for example, is €2.1 billion in debt – a third of which is due to its solidarity pact contributions. Duisburg had to borrow €500,000 over the past few years to pay its share, and even Oberhausen, the most indebted city in Germany, had to borrow €270 million for the east.

“There has to be an end with the dispersment in every direction,” Oberhausen’s Mayor Klaus Wehling told the paper.

“The solidarity pact is no longer in keeping with the times,” said Essen Mayor Reinhard Paß.

The mayors are determined to make the solidarity pact and their financial plight a key election topic. Frank Baranowski, the mayor of Gelsenkirchen and chief of the SPD in the Ruhr area, said he wanted the new state government in North Rhine-Westphalia to start an initiative in the upper house of parliament, the Bundesrat, to get rid of the solidarity payments.

“We can’t wait until 2019,” he told the paper. He said the goal of bringing the east to the level of the west has been obtained far earlier than anticipated.

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“Now is the time to concentrate on the problem areas in the west. The need is much higher here. The Ruhr area needs more investment in infrastructure and education.”

Baranowski said that people who criticize the transfer payments have often been criticized as an “enemy” of the east, but called for the topic to be discussed in a sober manner, by sticking to the facts and the economic reality of cities in the Ruhr region.

The Local/mw

The Local (news@thelocal.de)

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Your comments about this article

10:15 March 20, 2012 by Wrench
When the 'Solidarity Tax' started it was to be only temporary and it was even said by Helmut Kohl we would get our money back. Fat chance Helmut! I've paid this tax from the start and find it to be a ridiculous waste of my money. Time for this tax to end.
10:55 March 20, 2012 by Michel_Berlin
Maybe for a foreigner.

It helped to re-unify my country, Germany. Without that we wouldn't had been able to shoulder that task.

But I agree with the article. East Germany is mostly shiny new now, with a highly modernized infrastructur in place. Some eastern countries have surpassed several western countries by now...it's no longer needed so much in the East.

But I'm against scrapping it, it could be used now to do the same with needy western countries, helping there to get things back on track.
11:20 March 20, 2012 by pepsionice
I would strongly recommend....at least for two years....that it's the right time to hand private citizens back their money. Figure out some method of giving every German a check and just let them spend it. It'd help the economy and churn out more tax revenue for the nation. After two years....put the tax back into effect and identify it strictly for infrastructure projects like roads and bridges.
11:39 March 20, 2012 by Englishted
N.W.R. was the production heart of Germany ,but with funds to the East also went many firms seeking cheaper labour and tax breaks on building factories.

It is like the E.U. on a small scale ,yes help should be given when needed as it is in some places now and was when the East opened .

But you cannot kill the goose that is laying the golden eggs and that is happening now .Stop this tax and stop firms exporting work .Outsourcing is outrageous when done only for greed.
13:16 March 20, 2012 by yourkeau
Solidarity is solidarity. I also pay solidarity tax and I think this is good. I don't want poor East areas of Germany to be poor.

As for "poor Ruhr" area, this is nothing but propaganda. In Bavaria there are also poor cities, so the state government helps them. NRW has the largest share of German GDP, and is fully responsible for its indebted cities. Cancellation of solidarity tax will make little difference.
13:41 March 20, 2012 by klaus stoiber
Fellow germans, this is a good tax BUT time now has come to stop monies going to recovering or recovered regions but diverted now to needy cities and this DDR tax must also be reduced on our salaries so we can spend more in our own west german cities to prevent us from faltering
14:08 March 20, 2012 by DULS
Money transfers should be done to the cities and areas in more need. This should be decided based in their social and economic indicators on yearly basis. For those saying that is only propaganda, should take a tour in Rhurpott, they really need the money! I don't understand how come the new shiny east still need money transfers.
15:53 March 20, 2012 by Bavaria Mike
"On Tuesday, Armin Laschet, deputy leader of the Christian Democratic Union in the state's parliament, said the payments had to continue, saying it was important to stick to the agreement as it provided a basis for planning."

It was supposed to be for 1 year, not 23 years or 30 years. What about that plan?
16:50 March 20, 2012 by DoubleDTown
so if the poor Ruhr towns don't have to pay Soli, do the Easterners get to earn equal pay? Can't have it both ways guys. Why should a Postfrau in the East earn less than a Postfrau in some poor Ruhr town? And so on.
17:43 March 20, 2012 by DULS
Dude that is easy, supply and demand, let your poor postfrau move to the Ruhrpott and get one of those well paid western jobs (you must be kidding). Besides using the same logic from DoubleDTown, why should the west be more expensive than the east, like food, rents, water, electricity and SO ON. The salary base now days is almost the same, nothing just a couple of euros. That is not excuse.
19:47 March 22, 2012 by UncleFatBloke
I can understand that these politicians have looked first at the Soli, because it is an expense that is not bringing any visible or financial return to their region, but, what they are not doing is telling the tax payers WHY their books are not balanced!

Have they looked at all possible areas of cost saving?

The UK is trying to address the unequal burden the public sector puts on the budget compared to the income generated by the private sector. Is it time for Germany to finally wake up and see that they are extremely beamter top-heavy?!
15:54 March 24, 2012 by Seeloewen
As an American living in Schleswig Holstein, my experience, limited I admit, is that the East has profited enough from the Soli tax. Just take a look at the many old buildings in Schwerin that have been beautifully renovated and are now a tourist draw. So this isn't money that has been thrown down the drain, but it is time to gradually stop - not in 2019. I think the east has become over-reliant on this tax.
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