German city reaps tax boon thanks to success of BioNTech’s Covid vaccine


As the people of Mainz gathered in late November for their first glass of festive mulled wine at Schillerplatz, the medieval heart of the German city, officials at the nearby town hall realized they had even more reason to look forward to Christmas.

The former Roman stronghold on the banks of the Rhine had become the beneficiary of a billion euros fiscal windfall, in large part thanks to BioNTech, the Covid-19 vaccine developer founded in the city in 2008.

“During the pandemic, Mainz has become the pharmacy of the world,” said Mayor Michael Ebling, who has pledged to use funds from BioNTech’s central role in the fight against the coronavirus to write off the city’s debts.

Corporate taxes – some of which may be set by German local authorities – will also be reduced in an attempt to attract more biotech companies.

More than 2 billion doses of the BioNTech / Pfizer vaccine have been delivered to date, and BioNTech is on track to post more than 10 billion euros in net profit for 2021. For the nine months to the end of September, the company, which has sites in the United States and other German cities like Marburg have paid more than 3 billion euros in taxes.

Officials would not publicly confirm how much tax BioNTech has paid in Mainz in recent months. But the company, unknown even to many of the city’s 220,000 residents before the pandemic, has almost on its own increased Mainz’s corporate tax from 173 million euros for 2020 to more than one billion euros. euros in 2021, according to several people familiar with the subject.

BioNTech’s head office is conveniently located on “At the Goldmine”, a road named after a Roman archaeological find © Abdulhamid / Hosbas / Anadolu Agency / Getty

Having gained worldwide fame for the 15th century Gutenberg printing press, Mainz has long been the poor relation of Frankfurt, the neighboring German financial center. But unlike Sindelfingen, a town in southwest Germany that’s home to a Mercedes-Benz factory and has used the latest tax revenues to install marble crosswalks, Mainz is not embarking on a spending spree.

“Our top priority is to pay off our cash debt [short-term loans] of 634 million euros by the end of 2022, ”CFO Günter Beck told the Financial Times. “There is a broad political consensus in favor of this decision because as long as the debt is not paid, we have no freedom to decide on discretionary spending.”

The indebted German cities that benefit from these loans can only spend money on “must” projects.

The state of Rhineland-Palatinate, of which Mainz is the capital, had the highest level of short-term debt per capita in 2020, according to figures from the Bundesbank. The city itself has been on a debt relief program for almost a decade.

Now Mainz will have a surplus of nearly 1.1 billion euros in 2021, and authorities expect an additional surplus of over 490 million euros next year.

After his short-term debts are paid, Ebling, of the Social Democrats, aims to use the city’s good fortune to reduce his dependence on a single company.

“We will now use our positive financial situation and our budget surpluses to establish a global science and biotechnology hub,” he said, pledging to accelerate the transformation of a former 12 hectare barracks near the BioNTech headquarters into a commercial and cultural center. About 5,000 jobs would be created in the process, added the mayor.

Tenants shouldn’t be missing. Thanks to BioNTech, companies across Germany and beyond have requested a move to the city, officials said.

“Suddenly, we are well known in Singapore,” said Günter Jertz, managing director of the Rheinhessen region chamber of commerce, which includes Mainz. For a city that only made headlines for its annual carnival, the scientific and commercial success of BioNTech, he added, “is invaluable publicity.”

Mainz is also rolling out the red carpet. Full of cash, the city will lower its corporate tax by nearly a third next year, a measure that will save businesses more than 350 million euros in 2022, according to the mayor.

The reduced rate brings Mainz closer to the neighboring town of Ingelheim – home to Germany’s second-largest pharmaceutical company, Boehringer Ingelheim – and makes the city a much cheaper place to do business than neighboring Wiesbaden or Frankfurt, both located in the state of Hesse.

The decision was made “because we want to give something back to those who keep the economy running in Mainz,” Beck said.

Did he mean BioNTech, and did the vaccine developer demand a lower rate? “No,” Beck insisted, “of course not.”

The Mainz shopping center, where occupancy rates fell during the pandemic, needs more investment. The city also lacks housing and places for kindergartens.

But few have criticized the priorities of the town hall. “It is so important that we invest in the development of the business and biotechnology site,” said Peter Hähner, banker and chairman of the Rheinhessen chambers of commerce. “The cycle paths [can] come after that.

Plus, he said, “There could be a risk if we don’t support BioNTech, they will. . . go away “.

There is no indication that the company, which originated from Johannes Gutenberg University, where founders Ugur Sahin and Ozlem Tureci conducted cancer research, will leave the city.

BioNTech founders Ugur Sahin and Ozlem Tureci at an award ceremony in Mainz in November

BioNTech founders Ugur Sahin and Ozlem Tureci at an awards ceremony in Mainz in November © Abdulhamid Hosbas / Anadolu Agency / Getty

Last month, the company announced it would spend more than € 1 billion to expand its headquarters, located on “At the Goldmine,” a road named after a Roman archaeological find. It would also build 10 sites in Mainz and employ thousands more in the years to come, Sahin said.

Several companies in the region have also benefited from sales of Covid vaccines, including Germany’s Merck, which produces lipid nanoparticles for BioNTech / Pfizer, and suppliers such as vial maker Schott.

Beck, who represents the Green Party, is convinced that these companies and the newcomers will keep Mainz in the money. Even if this is done to the detriment of other more taxed cities.

“There was an article [in the newspaper] saying that Wiesbaden is jealous and that Mainz is not showing solidarity, ”he said. “Well, Wiesbaden has been rich for decades and Mainz was poor. There was also no solidarity from Wiesbaden to Mainz.

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