Pressure is mounting on the German government to accelerate planned corporate tax cuts, as policymakers grapple with a persistently weak economic outlook. Bavarian Premier Markus Söder, of the CSU, has publicly advocated for bringing forward the gradual reduction of the corporate tax rate – currently scheduled to begin in 2028 – to July 2026, “provided our financial room for manoeuvre allows”. Söder argues that such a move would provide a “vital boost” to the struggling German economy.
The current coalition government intends to lower the corporate tax rate from 15% to 10% in five steps between 2028 and 2032. Söder’s proposal, to advance this process by a year and a half, reflects growing unease amongst certain factions within the political landscape.
The sentiment for accelerated tax relief isn’t limited to the CSU. Danyal Bayaz, Baden-Württemberg’s Finance Minister from the Green Party, has also voiced support for an earlier reduction. He suggests a reduction of two percentage points could be implemented as early as next year, potentially achieving the target rate of 10% within the current legislative period.
The call for immediate action underscores a broader critique of the government’s initial approach. Astrid Hamker, President of the CDU’s Economics Council, contends that the original agreement to delay tax relief until the end of the legislative period was a significant misstep. She argues that a proactive, early reduction of corporate taxes should have been prioritized over the current phased-in strategy.
The debate highlights a potential rift within the governing coalition and exposes the difficulties in balancing fiscal responsibility with the urgent need to stimulate economic growth. While proponents argue that accelerated tax relief is crucial to bolster German competitiveness and attract investment, critics remain cautious about the potential impact on public finances and long-term budgetary stability. The push for earlier action signals a deepening political debate concerning the best course of action to address Germany’s current economic challenges.