In view of the current economic burdens, the federal government is launching a comprehensive relief package.
• Tax-free bonus of up to 1,000 euros planned for employees
• Counter-financing through an early tobacco tax increase
• Temporary reduction in energy tax should significantly reduce fuel prices
As can be seen from a current resolution paper from the Union and the SPD, employees and drivers should be given noticeable support in a timely manner.
The energy tax on diesel and gasoline is to be reduced by around 17 cents gross per liter, limited to two months, as the leaders of the CDU, CSU and SPD in Berlin announced after two days of deliberations. Employees should also be able to receive a tax-free 1,000 euro bonus from their employers. To provide counter-financing, the tobacco tax is to be increased as early as 2026. In addition, the coalition leaders announced comprehensive reforms, for example in health.
Chancellor Friedrich Merz (CDU) said that the mineral oil tax reduction should improve the situation for drivers and companies very quickly. The federal government expects the petroleum industry to pass on the relief. According to Labor Minister Bärbel Bas (SPD), consumers and the economy should receive a total of around 1.6 billion euros in fuel price relief.
Excess profits tax should be examined
In this context, the coalition welcomed the European Commission’s announcement that it would examine certain measures towards the oil industry. What this means is an excess profits tax. The counter-financing of the tax relief should take place through antitrust or tax law measures against the oil companies.
The coalition leaders discussed the energy price crisis and upcoming reform projects in the Berlin Villa Borsig until the night. Negotiations ran throughout the weekend.
Health reform by summer
In addition to immediate responses to the oil price crisis, the coalition is undertaking a number of more extensive reforms. Black-red wants to avert a further increase in health insurance contributions through a major health care reform. The basis should be the proposals submitted by a commission of experts. A corresponding bill should be passed in the cabinet at the end of April and in the Bundestag by the summer break. Merz announced “one of the biggest welfare state reforms in our country.”
Contribution stability should be achieved by limiting expenditure. Merz announced “corresponding corrections in the range of services”. “Everyone affected and all service areas will have to make a contribution.” CSU leader Markus Söder explained: “We cannot spend more than we earn.” According to Merz, as many of the Commission’s suggestions as possible should be implemented. The experts’ suggestions range from higher co-payments for medication to a tax on sweetened drinks. For practices and clinics, for example, the remuneration should not increase more than the health insurance companies’ income.
Klingbeil announces income tax reform
Finance Minister Lars Klingbeil (SPD) wants to “quickly” present a draft for an income tax reform. This should take effect from January 2027 and lead to noticeable relief for small and medium incomes, said the SPD leader. Details will be worked out in the next few weeks, said Merz. The Union and the SPD want to keep the promise from the coalition agreement to reduce income tax in the middle of the legislative period. How this should be financed is still controversial. The SPD wants to tax top earners higher in return, but the Union is skeptical about this.
The Chancellor announced intensive work on the details of the announced reforms. “These are major reform projects,” said Merz. At the same time he announced further projects. “This is just the beginning. These were not final discussions yesterday, but the start of a whole series of consultations that we will continue.” What is needed is “confidence and a good mood again, also for a good future in our country.”
Fuel prices rose sharply
The Iran war threatens to increasingly disrupt the coalition’s reform agenda. Even before the attacks by the USA and Israel and the counter-reactions by Iran, the Union and the SPD had announced major reforms. Because of the consequences of the war, government partners are increasingly forced to bring forward concrete relief measures. Economists expect that the consequences of the war threaten to destroy the long-awaited economic recovery in Germany.
Since the outbreak of the Iran War, fuel prices have risen extremely sharply. Since the war began on February 28 with US-Israeli attacks on Iran, Tehran had blocked the Strait of Hormuz off its coast, which is important for oil transport. The passage of ships practically came to a standstill.
Dispute in coalition
Before the weekend, the dispute within the coalition over relief for consumers had intensified. While Klingbeil meets representatives of trade unions and employers, Economics Minister Katherina Reiche (CDU) attacks him sharply. Merz does not see the federal government’s stability at risk. “I assume that we in the federal government will continue to work well, completely unaffected by last week’s discussion.” He didn’t like the public discussion and therefore asked “that it stop.” According to Merz, the disputes have now been resolved.
Claudia Stephan, Bettina Schneider, finanzen.net editorial team with material from dpa-AFX
