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

As the inhabitants of Mainz gathered in late November for their first festive glass of wine in Schillerplatz, the medieval heart of the German city, officials at the nearby Town Hall realized they were There are even more reasons to cheer Christmas.

The former Roman stronghold on the banks of the Rhine has become the beneficiary of billions of euros in taxes, largely thanks to BioNTech, the developer of a Covid-19 vaccine 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 capital outflows from BioNTech’s vital role in the industry. fighting coronavirus to clear the city’s debt.

Company taxes – some possibly set by local German authorities – will also be cut to attract more biotech businesses.

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

Officials will not publicly confirm the amount of taxes BioNTech has paid to Mainz over the past few months. But the company, unknown to many of the city’s 220,000 residents before the pandemic, almost single-handedly raised Mainz’s corporate tax rate from 173 million euros in 2020 to more than 1 billion euros in 2021, according to some people knowledgeable about the matter.

BioNTech headquarters in Mainz

BioNTech’s headquarters are appropriately located on ‘At the Goldmine’, a street named after a Roman archaeological find © Abdulhamid / Hosbas / Anadolu Agency / Getty

Achieving global fame thanks to Gutenberg’s 15th-century printing press, Mainz has long enjoyed a fraught relationship with neighboring Frankfurt, Germany’s financial hub. But unlike Sindelfingen, a southwestern German city with a Mercedes-Benz factory and which used recent tax revenues to install marble zebra crossings, Mainz won’t spend it wild fee.

“Our highest priority is clearing cash debt [short-term loans] is 634 million euros at the end of 2022,” chief financial officer Günter Beck told the Financial Times. “There’s a broad political consensus for this move because until the debt is paid, we don’t have the freedom to decide on discretionary spending.”

Indebted German cities that receive these loans can only spend money on “inevitable” projects.

The state of Rhineland-Palatinate, of which Mainz is the capital, has the highest level of short-term debt per capita in 2020, according to data from the Bundesbank. The city itself has been enrolled in the debt forgiveness program for nearly a decade.

Now, Mainz will run a surplus of nearly 1.1 billion euros in 2021, and authorities expect a surplus of more than 490 million euros next year.

Once the short-term debts are paid off, Ebling, of the Social Democratic Party, aims to capitalize on the city’s fortunes to reduce dependence on a single company.

“We will now use our positive financial position and budget surplus to establish a global center for science and biotechnology,” he said, promising to promote accelerated the conversion of the former 12-hectare barracks near BioNTech’s headquarters into a cultural and business center. The mayor added that about 5,000 jobs will be created in the process.

So there is no shortage of tenants. Thanks to BioNTech, companies from across Germany and beyond have asked about moving to the city, according to officials.

“Suddenly, we became known in Singapore,” said Günter Jertz, executive director of the chamber of commerce for the Rheinhessen region, which includes Mainz. For a city that once made headlines only for its annual carnival, he added, BioNTech’s scientific and commercial success “is priceless advertising.”

Mainz is also rocking the red carpet. In cash, the city will reduce company taxes next year by almost a third, a measure that will save companies more than 350 million euros by 2022, according to the mayor.

The reduced rates help Mainz match nearby Ingelheim – home to Germany’s second-largest pharmaceutical company, Boehringer Ingelheim – and make the city a much cheaper place to do business than its neighbors Wiesbaden or Frankfurt, both both in the state of Hesse.

Mr Beck said the decision was made “because we wanted to give something back to the people who keep the economy going in Mainz”.

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

Mainz’s mall, where occupancy has plummeted during the pandemic, needs more investment. The city is also facing a shortage of housing and kindergartens.

But few have criticized City Hall’s priorities. Peter Hähner, banker and president of the Rheinhessen chamber of commerce, said: “It is important that we invest in the development of the business location and biotechnology. “The Cyclic Paths [can] come later. ”

Furthermore, he said, “there could be a risk if we don’t support BioNTech, that they. . . go away “.

There is no indication that the company, which was spun off from Johannes Gutenberg University, where the founders Ugur Sahin and Ozlem Tureci conducting cancer research, will be leaving 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 euros to expand its headquarters, located on “At the Goldmine,” a street named after a Roman archaeological find. They will also build 10 locations across Mainz and employ thousands more in the coming years, Sahin said.

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

Beck, who represents the Green party, is confident that such companies and newcomers will keep Mainz’s money. Even if that hurts other cities, there are higher taxes.

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

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