The coalition agreed on several changes to the planned federal budget for 2027. A cut in electricity tax for households is not among them for the time being: no funding has yet been found to cover the cost, said CDU/CSU parliamentary group leader Thorsten Frei after talks between the governing parties. On 12 November, the Bundestag’s Budget Committee was due to discuss the final changes to the budget.
The decision affects a proposal championed by Chancellor Friedrich Merz . The CDU/CSU and the SPD had agreed in their coalition agreement to reduce electricity tax for everyone to the European minimum as quickly as possible. So far, however, the corresponding tax relief has applied only to manufacturing, as well as agriculture and forestry. Private households will therefore initially continue to pay the existing tax rate.
According to the dpa news agency, a general cut would cost around €5.4 billion. Frei said the proposal remained a high priority for his parliamentary group. No firm new date for its implementation was set after the talks. The lack of funding highlights the conflict between the desire to lower energy costs and the federal budget’s limited room for manoeuvre.
On other tax measures, the coalition partners moved away from their previous plans. The levy on highly sweetened drinks is now due to start on 1 January 2028, according to the agreement. The previous proposed date was 1 July 2027. The coalition says the tax will have three bands based on sugar content, rather than two. The CDU/CSU had also argued for a later start on the grounds that manufacturers needed time to reformulate their products.
A planned tax on plastic packaging will not initially be introduced in 2027. The proposed increase in sparkling wine tax has also been dropped under the coalition agreement. Frei indicated that this would be offset by deeper cuts to staffing in the federal administration.
The SPD, for its part, said planned cuts to family benefits would be softened. According to SPD parliamentary group leader Matthias Miersch, the core of housing benefit would be retained, while an adjustment planned for 2027 would be suspended. Final negotiations on parental allowance and maintenance advance payments were still under way, dpa reported.
It also remained unclear whether so-called fiscal drag would be fully offset in Income tax . Fiscal drag occurs when wages rise to keep pace with increasing prices, pushing people into higher tax payments even though their purchasing power has not risen accordingly. The CDU/CSU pressed for full compensation; according to the parliamentary groups, funding for this was also initially lacking.
The coalition groups’ agreement was not yet a final budget decision. MPs were due to discuss the last changes in the Budget Committee on 12 November. The Bundestag was due to approve the budget at the end of November.
Editor: Phillipe Schmidt-Araguin (Article created with AI assistance).