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Pfizer/BioNTech tax windfall brings Mainz an early Christmas present | Germany

The Pfizer/BioNTech jab is having an sudden side-effect on the German municipality the place scientists first developed it: for the primary time in three many years the town of Mainz expects to grow to be debt-free due to the tax revenues generated by the corporate’s world success.

Mainz’s determination to make use of its monetary windfall to additionally slash company tax charges within the hope of attracting trade, particularly biotech firms, nonetheless, is drawing criticism from neighbouring cities and economists.

Town of about 217,000 inhabitants within the western state of Rhineland-Palatinate, has been carrying a crippling debt burden for the reason that early 90s when authorities took out a mortgage that grew to €1.3bn (£1.1bn). Over the primary yr of the pandemic, the Rhine river metropolis’s debt pile accrued an additional €30m in curiosity alone.

The costumed and masked statue of Johannes Gutenberg in Mainz city centre.
The costumed and masked statue of Johannes Gutenberg in Mainz metropolis centre. {Photograph}: Ronald Wittek/EPA

However the success of BioNTech, whose founders Uğur Şahin and ‎Özlem Türeci labored with the pharmaceutical large Pfizer for trials and manufacturing of their Comirnaty vaccine in 2020, has reworked Mainz’s fortunes.

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As a substitute of an anticipated 2021 budgetary overspend of €36m, the town senate this winter introduced a price range surplus of €1.09bn. With one other surplus of €490.8m anticipated in 2022, Mainz hopes to clear its remaining debt inside a yr.

Owing to German tax secrecy legal guidelines, BioNTech has not been formally named because the supply of what Mainz’s senate calls the town’s “Cinderella story”. However the good-looking wealth of the corporate that created the primary vaccine authorised within the west isn’t any secret. In January-September 2021, BioNTech made €10.3bn in pre-tax income, of which it paid €3.2bn in tax – although the corporate has a number of websites in Germany and has not mentioned to which municipalities the cash went.

Earlier than the Covid-19 pandemic, Mainz’s primary reward to the world was the printing press, whose inventor, Johannes Gutenberg, developed a way of printing from movable kind within the metropolis in about 1440.

Mainz’s mayor, Michael Ebling, mentioned the game-changing growth of BioNTech’s mRNA vaccine was of equally excellent significance. He informed the Guardian he wished to make use of the tax cash to settle his metropolis’s money owed, quite than spend money on spectacular infrastructure initiatives. “Christmas could also be upon us, however for the town of Mainz now is just not the time to attract up lengthy wishlists,” Ebling mentioned. “The tax windfall will definitely make it simpler to honour the opposite achievements that our metropolis has given to the world.”

In addition to selling Mainz’s function within the printing revolution, the mayor mentioned he would nourish its fame as an innovator in soccer: the Liverpool coach Jürgen Klopp and Chelsea’s Thomas Tuchel first made their names managing the native Bundesliga membership Mainz 05. “We will renovate the Gutenberg museum of printing, and our soccer pitches will stay in such a state that each participant can play a clear go,” he mentioned.

A Mainz 05 fan in Christmas hat
A Mainz 05 fan at a Bundesliga match on 14 December. The membership will profit from the town’s BioNTech windfall. {Photograph}: Alex Grimm/Getty Pictures

Ebling’s greatest plan, nonetheless, is to construct on the vaccine makers’ success and switch Mainz into a world biotech hub: a 12-hectare (30-acre) plot close to BioNTech’s headquarters, the college clinic and the German Most cancers Analysis Centre has been earmarked for growth.

Over the following 10 years, the town hopes to create 5,000 new jobs, partly by luring firms via a lot decrease company tax charges, which German municipalities are capable of set themselves on prime of the federal company tax fee of three.5%. Mainz plans to chop its company tax fee from 440 to 310 share factors, by far the bottom amongst German cities with greater than 50,000 inhabitants.

The senate says the reduce is a present not solely to science startups searching for a brand new residence, however to smaller firms which have suffered within the pandemic. A spokesperson denied the diminished tax fee was designed to cease BioNTech relocating to different low-tax areas.

However in Wiesbaden, notionally Mainz’s richer brother throughout the Rhine, native politicians have criticised Mainz as “extraordinarily missing in solidarity”, whereas economists predicted the transfer might set off a race to the underside amongst German cities.

“It’s comprehensible that Mainz has lowered the tax fee, however I might share native politicians’ criticism of the extent to which they’re slashing the speed,” mentioned René Geissler, a professor of public administration on the Technical College of Utilized Sciences in Wildau. “It’s a little bit of a bombshell.”

“It’ll create monumental stress on different cities to comply with go well with,” he added, questioning whether or not the plan would essentially pay dividends. For startups, he mentioned, a low tax fee was usually far much less essential when selecting their headquarters than proximity to analysis establishments or firms working in the identical discipline, situations Mainz already presents.

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