Discussions between the Social Democratic Party (SPD) and the Christian Democratic Union (CDU) are reportedly leading 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 approach. 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 CDU politicians and associations have urged a reconsideration of the decision. Consequently, efforts are underway behind the scenes to reach a solution that benefits all consumers while being less costly. A temporarily discussed retroactive reduction of the electricity tax has been dismissed. Coalition sources indicate that a phased or temporary reduction is the most likely outcome.
A resolution is also anticipated 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 support the states in debt-ridden municipalities with debt relief.
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 necessitate the support of the Green and Left parties in the Bundestag to achieve the two-thirds majority required for such an amendment.
