Disagreements are emerging within Germany’s governing coalition regarding tax policy, specifically proposals for income tax relief and the potential for increased levies on high earners.
Members of the CDU/CSU parliamentary group have expressed cautious support for easing the tax burden on lower and middle incomes, an objective outlined in the coalition agreement. Steffen Bilger, the CDU/CSU’s parliamentary managing director, affirmed this commitment, while also advocating for raising the income threshold for the top tax rate as a key priority for discussion with the SPD. However, Bilger cautioned against approaches that could be interpreted as class warfare, emphasizing the need to recognize hard work, responsibility and achievement across all income levels. He argued that tax increases, particularly in a challenging economic climate, could harm the country’s small and medium-sized businesses, impacting investment and employment.
Dirk Wiese, parliamentary managing director of the SPD, previously proposed that alongside relief for low and average earners, higher incomes should be subject to increased taxation. He stated his willingness to openly discuss this approach, suggesting the CDU/CSU also pursue their priorities vigorously within the coalition.
The AfD parliamentary group has leveled strong criticism, characterizing the SPD’s proposals as a symbolic attempt to reclaim its historical identity as the party of the working class. Kay Gottschalk, an AfD finance policy spokesperson, contends that Germany’s primary issue is not revenue collection but rather expenditure control, highlighting the need to scrutinize areas like EU contributions. He also asserted that Germany is losing ground as an investment location and that high tax burdens are discouraging skilled workers from coming to the country.
The Green Party has warned that backtracking on promises made in the coalition agreement is imminent. Andreas Audretsch, a Green Party parliamentary vice-president, pointed to the coalition’s previous decisions on tax cuts primarily benefiting the wealthiest percentile and the subsequent claim of insufficient funds to lower the electricity tax. He characterized the current trajectory as catering to the interests of the ultra-rich at the expense of the broader population.
The Left Party has called for more extensive reforms, advocating for both income tax reform and the reintroduction of wealth tax. Party leader Heidi Reichinnek argued that the current system is unjust, with hard work inadequately rewarded and inherited wealth largely untaxed.