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Will taxes increase in Germany?

2025-09-03 08:15:00, Kosova & Bota CNA

Will Germany impose higher taxes on the wealthy to close a budget gap of more than 30 billion euros? A major debate is taking place in Germany between the coalition parties.

The German budget for 2027 is facing a deficit of several billion euros. Therefore, Finance Minister Lars Klingbeil does not rule out a tax increase for those with high incomes. The Christian Democrats are outraged. Now Klingbeil, who is also the leader of the SPD, has clarified his position on the show "Bericht aus Berlin", emphasizing that everyone must make their contribution.

For weeks now, there has been a debate in Germany about whether higher taxes on the wealthy are needed to close a budget gap of more than 30 billion euros. Finance Minister Lars Klingbeil announced this in an interview with ZDF in mid-August, but faced stiff resistance from coalition partners from the CDU/CSU parties.

Now Klingbeil has defended and specified his position on the show "Bericht aus Berlin". He said that the budget deficit for 2027 had increased further due to projects such as the "mother's pension" and compensation for municipalities as part of the "growth stimulus" project.

"I don't think there's ever been a federal government that has had to close such a big budget gap," Klingbeil said. "And I advise that all options be kept open until we can announce that the $30 billion has been paid off and that this gap has been closed."

Klingbeil warns of the risk of "social cuts"

Reflecting on the Christian Democrats' refusal to discuss tax increases, Klingbeil said: "I wonder what ideas the chancellor and others will propose to close the 30 billion deficit."

The SPD leader warned that cuts to social systems should not be the main objective in this context: "There are some, I sometimes notice this in the political debate, who seem to think that all the money can be saved on pensions, healthcare, care for the disabled and other things."

Klingbeil said it was now about the whole package, which had to be fair and balanced. "We will have to ask people for something, that's true. But it's very important that there is a feeling that this belongs to everyone and that everyone has to contribute." He added that he was pleased that the debate on this was starting now. "It's important to me that we don't just start when the 2027 budget approaches, but that we do this in the coming weeks."

Merz clearly opposes tax increases

Meanwhile, Federal Chancellor Friedrich Merz has clearly rejected the idea of ??raising taxes. The CDU/CSU and SPD agreed in the coalition agreement that taxes would not be raised, the CDU chairman said in a summer interview with ZDF, adding: "The agreed coalition agreement stands."

The topic was discussed extensively in coalition negotiations. At the time, CSU leader Markus Söder and CDU leader Friedrich Merz made it clear to Klingbeil that they would not sign the agreement if the SPD insisted on tax increases. "The SPD knows this very well," Merz said.

The chancellor added: "The fact that the SPD has different views on this issue is just as good as the fact that we have our own views on other issues. We are not looking for what divides us. We are looking for what allows us to govern together and responsibly."

Söder calls on the SPD to respect the agreement

Söder also criticized Klingbeil's proposals. "No, we are not raising taxes now. We should lower taxes," he told Handelsblatt. "Anyone who signs a coalition agreement should implement it and not question everything after a few months."

Söder also rejected the idea of ??some CDU MPs offering the SPD higher taxes on the wealthy in exchange for reforms to the welfare system. "That is out of the question for me," the CSU leader stressed. Söder stressed that the costs caused by migration and the exploitation of welfare systems have exploded and that a "fundamental update" is needed.

He is again calling for a reform of social benefits, called "Bürgergeld", which would mean stricter criteria for those who refuse to work or receive money from the state for housing and services. This position is also held by CDU leader and Chancellor Friedrich Merz./ DW