A growing rift is emerging within Germany’s ruling coalition as calls mount for an accelerated reduction in corporate tax rates, a move championed by CSU leader Markus Söder and now gaining cautious support from within the CDU. The proposal, initially slated for 2028, would see the corporate tax rate lowered to a previously agreed-upon level two years earlier.
Steffen Bilger, the CDU/CSU’s First Parliamentary Managing Director, signaled the party’s willingness to revisit the timeline, arguing that revitalizing economic growth and bolstering Germany’s competitiveness must be prioritized by 2026. While acknowledging the need to assess financial feasibility, his remarks represent a clear shift, potentially forcing a delicate renegotiation within the governing alliance.
The pressure isn’t solely internal. CDU General Secretary Carsten Linnemann echoed the sentiment, advocating for swift tax relief, particularly for low and middle-income earners. He emphasized the importance of adhering to the coalition’s pledge for a comprehensive income tax reform around the midpoint of the legislative term, suggesting a broader reshaping of the tax landscape.
Industry voices are amplifying the urgency. Helena Melnikov, Director General of the German Chamber of Industry and Commerce (DIHK), told “Bild” that an earlier tax cut would inject much-needed investment into a struggling economy, especially crucial given the current crisis. Similarly, Wolfgang Große Entrup, head of the German Chemical Industry Association (VCI), warned that prolonged delays risk Germany losing its competitive edge and jobs to foreign nations, emphasizing, “Every day of waiting is a day against the location.
The push for accelerated tax cuts highlights a growing divergence in economic strategy within the coalition. While the Social Democrats, traditionally resistant to significant corporate tax reductions, may face considerable opposition, the potential for a fractured policy response underscores the precariousness of the government’s standing and the increasing pressure to implement immediate measures to stimulate economic recovery, even if it requires revisiting previously agreed upon commitments. The debate also lays bare the underlying anxieties surrounding Germany’s industrial competitiveness and its ability to attract and retain capital in a rapidly changing global economic order.