German Party Leader Calls for Redrawing of Fiscal Balance between Federal and Regional Governments
Ahead of a minister-presidents’ conference in Berlin this week, the leader of the Christian Democratic Union (CDU) in the Baden-Württemberg state parliament and the party’s top candidate for the 2026 state election, Manuel Hagel, has advocated for a reorganization of the expenditure distribution between the federal government and the states.
According to Hagel, the states are generally well-provided for by the federal government, but local authorities require more support. He pointed out that while the federal government offers companies a 30% write-off for investments, local authorities are missing out on these revenue gains. Hagel expects the federal government to compensate local authorities for the financial shortfall, stating, “Who orders, who pays.”
At the minister-presidents’ conference on Wednesday in Berlin, the states will push for concessions on the financing of planned investment projects, including tax relief for companies, from the federal government. Hagel emphasized that a reorganization of the federal-state fiscal balance is “urgently” needed, as the states cannot continuously act as permanent guarantors and risk bearers for the federal government’s promises and services.