TonThe Pfizer/BioNTech vaccine has an unexpected side effect on the German municipality where scientists developed it for the first time: Mainz is expected to become debt-free for the first time in 30 years due to the tax revenue generated by the company’s global success .
However, Mainz decided to use its financial windfall to cut corporate tax rates in order to attract industries, especially biotech companies, which attracted criticism from neighboring cities and economists.
This city of approximately 217,000 residents in the western state of Rhineland-Palatinate has been carrying a heavy debt burden since the authorities lent a loan that grew to 1.3 billion euros (1.1 billion pounds) in the early 1990s. In the first year of the pandemic, the debt accumulation in the Rhine cities increased by 30 million euros only with interest.
But the success of BioNTech, its founder Uğur Şahin and Özlem Türeci In 2020, the collaboration with pharmaceutical giant Pfizer to test and manufacture their Comirnaty vaccine changed the fate of Mainz.
This winter, the city’s Senate announced a budget surplus of 1.09 billion euros instead of the estimated 2021 budget overrun of 36 million euros. It is estimated that there will be a surplus of 490.8 million euros in 2022, and Mainz hopes to pay off the remaining debt within a year.
Due to German tax secrecy laws, BioNTech has not been officially named as the source of what the Mainz Senate called the city’s “Cinderella Story”. However, the huge wealth of the company that created the first vaccine authorized in the West is no secret. From January to September 2021, BioNTech realized a pre-tax profit of 10.3 billion euros, of which 3.2 billion euros were paid in taxes-even though the company Germany It did not say which municipality the money went to.
Before the Covid-19 pandemic, Mainz’s main gift to the world was the printing press, whose inventor Johannes Gutenberg developed a movable type printing method in the city around 1440.
Mainz Mayor Michael Ebling said that the game-changing development of the BioNTech mRNA vaccine is equally important. He told the Guardian that he wanted to use taxes to pay off the debts of his city instead of investing in spectacular infrastructure projects. “Christmas may be around the corner, but for the city of Mainz, now is not the time to make a long wish list,” Ebling said. “The tax windfall will definitely make it easier for us to deliver on other achievements our city has made for the world.”
In addition to promoting Mainz’s role in the printing revolution, the mayor also stated that he will enhance Mainz’s reputation as a football innovator: Liverpool coach Jurgen Klopp and Chelsea’s Thomas Tuchel first He is famous for managing the local Bundesliga club Mainz 05. “We can refurbish the Gutenberg Printing Museum. Our football field will remain in such a state that every player can make a clean pass,” he said.
However, Ebling’s biggest plan is to build on the success of vaccine manufacturers to turn Mainz into a global biotechnology center: 12 hectares (30 acres) of land near the BioNTech headquarters, university clinics and the German Cancer Research Center have been The designated use is development.
In the next 10 years, the city hopes to create 5,000 new jobs, partly by lowering the corporate tax rate to attract companies. German municipalities can set themselves above the federal corporate tax rate of 3.5%. Mainz plans to reduce its corporate tax rate from 440 percentage points to 310 percentage points, which is by far the lowest among German cities with a population of more than 50,000.
The Senate stated that the layoffs are not only a gift to science startups looking for a new home, but also a gift to small companies suffering from the pandemic. A spokesperson denied that the tax rate reduction was to prevent BioNTech from moving to other low-tax areas.
But in Wiesbaden, nominally Mainz’s richer brother across the Rhine, local politicians criticized Mainz for “extreme lack of unity”, and economists predict that this move may trigger German cities The race to the bottom.
“Mainz’s tax reduction is understandable, but I agree with local politicians’ criticism of their tax reduction,” said René Geisler, a professor of public administration at the Verdau University of Applied Sciences and Technology. “It’s kind of a blockbuster.”
“This will put tremendous pressure on other cities to follow suit,” he added, and questioned whether the plan will definitely bring dividends. He said that for start-up companies, when choosing a headquarters, low tax rates are usually far less important than companies that are close to research institutions or work in the same field, and Mainz has provided the conditions.
