Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
it is/was a couple of things.

1) Empty town coffers between - say - 2002 and 2005. You could read about towns reducing opening times for public libraries, public swimming pools etc. Even closing some of them. All in an attempt to save some money. It didn´t help that state and federal money for infrastructure also dried up during that period. So lot´s of things were delayed, postponed...
Going from personal observation that only started to change in late 2006 / early 2007 with the higher tax returns.

2) Just to add to 1), there was a tax reform in 2000. Besides lowering taxes it unfortunately (?) included some loopholes that allowed larger companies to drastically reduce their taxes even more for some years. It was even reported that some companies managed to pay practically no local taxes (going to the town/city) and only very reduced state and federal taxes.
I imagine "Deutsche Bank" and all the other large banks in Frankfurt were also benefiting from that "reform". Which might explain some of the problems of Frankfurt even today.

3) During that time some town and city mayors also started to complain about the "solidarity pact" with East Germany (Transfer of money from Western to Eastern Germany). Cities like Dortmund in the Ruhr region for example had to deal with high unemployment, a high rate of immigrants while losing tax paying businesses. And on top of that they allegedly still had to transfer some money east. (I didn´t check that. Just repeating German TV here.)

4) The DB CEO Mehdorn is one of the biggest fans of railway privatization. Of course for that he needs to show profits. Which - I suspect - means that he´d like to concentrate on the profitable ICE and IC routes while getting rid of the non-profitable short-distance and rural routes.
AFAIK at least some rural routes only stay open because local and state money subsidies are paid to the DB.

Your observation probably describes a combination of 1) and 4). And maybe 2)?

by Detlef (Detlef1961_at_yahoo_dot_de) on Sat Oct 6th, 2007 at 02:30:07 PM EST
[ Parent ]
  1. That sure was the end of it -- and the most recent higher tax returns were also visible (school renovation, and a new road into the commercial district). But what happened in the nineties?

  2. Yeah, I remember reading about negative corporate taxes, it was obscene. OTOH even with all this discussion about reduced public spending, it is interesting that those banks with the extra-profits didn't built new skyscrapers since 2000. Say, Deutsche Bank itself, still residing in the same glass twin towers as 20 years ago. (Maybe actually the sign of some financial rationality?)

  3. So not only wasn't just Stoiber who complained about the Soli, but mayors did so explicitely, too? Interesting. But AFAIK communities don't pay it directly, only federal and state tax is involved (e.g. the West German towns and cities are hit indirectly, by getting less back). Or... there is the Solidaritätszuschlag on corporate tax, maybe somehow that limits local governments' ability to tax?

  4. I have to precisify these.
a) Mehdorn is not a that big fan of rail privatisation, at least not since after a few years in office. It is well known that his main gripe is with the separation of infrastrucure and operations (something I happen to agree on with him, but perhaps not for the same reasons). At one point in the tussle over the issue, he told press something to the tune that "rail privatisation is what the politicians want, I only act accordingly!".
b) While "keep high-end services & if possible drop the rest" is indeed the big picture, S-Bahn service can also be profitable, or at least traffic with a secure long-term outlook for subsidies. Thus for example DB fought tooth-and-nails to get the RheinNeckar S-Bahn franchise. Now, Bad Vilbel is a busy station on a mainline with S-Bahn service, so I don't think DB is trying to sabotage local public transport here. OTOH sparing maintenance and personal costs (and maybe also expecting to sell the building or the real estate it's on) does indeed fit into the anorexic privatisation drive theme.
c) It's local passenger services, and most of them, that only run because subsidies paid by the Länder to DB (or a private provider). Most local lines retain freight service even after passenger service is discontinued. And even if there is no freight service, DB needs a permission from the federal railway agency (EBA) to really close the line (and tear up the tracks). However, at all three stages, DB's management can play games -- e.g. let a line decay until say a bridge is declared unsafe but renovation in that stage is too costy.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Oct 6th, 2007 at 03:45:07 PM EST
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