Discussions between the Social Democratic Party (SPD) and the Christian Democratic Union (CDU) are reportedly progressing towards a compromise regarding the reduction of the electricity tax. According to reports from “Handelsblatt” citing coalition and government circles, the electricity tax is likely to be lowered for all consumers, although potentially in a phased manner. A temporary reduction is also being considered as a second option.
The federal government had reversed its previous plan for a swift reduction in the electricity tax for all consumer groups last week. The current budget proposal focuses on lowering the tax for manufacturing, agriculture and forestry.
Finance Minister Lars Klingbeil (SPD) and Cabinet Office Minister Thorsten Frei (CDU) cited insufficient financial resources as the reason for the change. However, several members of the CDU/CSU and associations have urged a reconsideration of the decision. Consequently, discussions are underway to find a solution that would benefit all consumers while being less costly. A temporarily considered retroactive reduction of the electricity tax has been dismissed. Coalition sources indicate that a phased or temporary reduction is now the most likely outcome.
A resolution is also expected regarding the issue of municipal legacy debts. Sources indicate that an agreement is likely to be reached before Wednesday evening’s coalition committee meeting. Following this, the federal government is expected to provide support to states in the debt relief of heavily indebted municipalities.
The Federal Ministry of Finance has reportedly identified a legal pathway to resolve the issue of municipal legacy debts without requiring a constitutional amendment. Previously, it was assumed that a constitutional change would be necessary. However, amending the Basic Law would have required the support of the Green and Left parties in the Bundestag to secure the two-thirds majority needed for such an amendment.