Scholz of Germany on Covid crisis, vaccinations and higher taxes

This is not the time to consider the full reopening of the German economy, but rather the time to be strict and keep coronavirus infections low, the German finance minister told CNBC, adding that wealthier families will soon they will pay more taxes.

“There is no time to open. This is the time to be very tough, to keep infection rates low,” German Finance Minister Olaf Scholz told Annette Weisbach on Tuesday.

Europe’s most powerful economy has suffered from the coronavirus pandemic, as it has faced various waves of infections and subsequent blockages. In 2020, the German economy contracted by almost 5%, according to data from the International Monetary Fund, and is only growing by 3.6% this year.

At the same time, opposing public health messages from national and regional leaders have further complicated the situation.

Armin Laschet, leader of North Rhine-Westphalia, for example, said Monday that there should be a national closure. But just last week he had called for flexibility so that the various state leaders could fight the pandemic as they saw fit. Chancellor Angela Merkel also reversed plans for a closure for Easter.

“If we could take similar measures everywhere, that would help a lot and make it more understandable,” Scholz said, referring to the different regional approaches.

There have been calls in Germany for a more united approach in the fight against coronavirus. Citizens are frustrated with different arrangements between different regions as infections continue to rise.

Merkel has also called for a narrower and more uniform approach across the country, but so far regional leaders have prevented it.

As of Tuesday, Germany had reported more than 2.9 million deaths from Covid-19 and 77,103, according to data from the European Center for Disease Prevention and Control.

At the same time, there are concerns about the pace of vaccine deployment. Germany has distributed 22.8 doses of Covid-19 shots per 100 inhabitants since Monday, according to the ECDC. This is lower than in France, Cyprus, Ireland and Hungary, just to name a few examples in the EU.

In addition, German health experts decided last week to suspend the use of the Oxford-AstraZeneca shot for people under 60 due to renewed concern over reports of blood clots. This could become another obstacle to wider deployment, as there are now fewer people eligible to receive this vaccine and the number of vaccines available is still relatively limited.

Speaking to CNBC, Scholz appeared confident about the coming weeks and months for Covid vaccines.

“I think we will get to a situation where by the end of this month they will go from 4 to 5 million doses a week,” he said.

“I think this will make the necessary progress and that is why we need to be strict now, because if we are strict in reducing infections, it will be easier to be successful in vaccinating,” he added.

Scholz, a high-ranking figure in the German Social Democratic Party, had previously said the country must do everything necessary to get out of the coronavirus-induced crisis.

Germany is expected to raise more than 240 billion euros ($ 283 billion) this year to boost the economy, a question that the most fiscally conservative lawmakers have answered. Germany has had a long history of controlling its finances since it legislated in 2009 that governments could not incur significant debt.

The coronavirus pandemic has changed the dynamics around German debt, as more experts argue that the government should continue to provide incentives.

“We will continue to do whatever is necessary. This is expensive, but doing nothing would lead to even higher costs,” Scholz told reporters late last month.

But with more loans, there will be more taxes.

Germany “will have the opportunity to face all the burdens of fighting coronavirus with better growth in the coming years,” Scholz said, before adding: “Obviously there is a situation where there is no time. to reduce taxes on rich people or big business. “

“There is a need for tax relief for low- and middle-income people in households, but obviously those who are very rich, with very high incomes and businesses could not expect taxes to be cut,” he said.

Germany is preparing for national elections in late September. Merkel, who has been chancellor of Europe’s largest economy for 16 years, has said she will not seek a fifth term.

“I am sure there will be a change after the next election. As you know, I am running for the next chancellor and my party wants to lead the next government and the chances are growing,” he said.