The Union and the SPD say that a rise in the value‑added tax (VAT), a scenario forecast by economist Marcel Fratzscher, is not an option for them.
Steffen Bilger, a CDU parliamentarian and the first parliamentary managing officer of the Union faction, told the “Tagesspiegel” that “raising the VAT would be exactly the wrong way to go”. He noted that Germany already has one of the highest tax burdens in the world and that “our priority therefore lies clearly on relief measures rather than tax increases”.
The coalition partner, the SPD, rejects the idea as well. Frauke Heiligenstadt, the SPD’s finance spokesperson, explained that a VAT hike would affect all consumers equally, regardless of income. “This inevitably leads to a social imbalance because people with low and middle incomes have to spend a larger share of their earnings on food and everyday goods” she said. She also pointed to the slowly stabilising economic outlook.
According to current budget plans, a €130 billion gap remains. The governing “black‑red” coalition intends to close it through stronger economic growth, which will involve scrutinising and cutting spending.
For the Union the emphasis is on those two measures: “If we want to consolidate the budget, we must consistently review the spending side and reset priorities” Bilger added.
The SPD, on the other hand, focuses on the revenue side. “In principle, we must first examine and implement additional measures that can strengthen the state’s tax revenues” said Heiligenstadt. “Before discussing a VAT increase, we should exhaust all fairer and growth‑compatible options. That also means that the wealthy should contribute more to the overall financing of the state”.