Germany unveils bold tax hikes and cuts to slash budget deficit in half
BERLIN The German government is planning multiple tax increases to reduce the budget deficit. According to reports from the Redaktionsnetzwerk Deutschland (RND), citing government sources, the ruling coalition of the SPD and CDU intends to introduce a sugar levy next year, among other measures. Plans are also reportedly underway for a plastic tax, higher taxes on tobacco and alcohol, and cuts to state financial aid and subsidies.
Federal Finance Minister Lars Klingbeil (SPD) aims to save €20 billion through these measures. While officials from his ministry stated that a budget gap for 2027 had been closed through "various steps," the shortfall persists in the following year. They noted that the funding gap had been reduced by more than half, to under €30 billion.
CDU previously opposed sugar taxes
The proposed sugar levy is one of 66 recommendations to relieve pressure on health insurance funds, most of which the coalition government intends to implement. A committee tasked by Federal Health Minister Nina Warken (CDU) had recommended introducing a tiered tax on sugar-sweetened beverages such as colas and soft drinks. The UK, for instance, implemented a similar levy on sugary products in 2018, generating the equivalent of €377 million in revenue in the last fiscal year.
As recently as February, however, the CDU had rejected a sugar tax at its party conference.
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