Christian Haase of the CDU, the Union’s chief budget expert, views the push for further income tax relief critically. Speaking to Der Spiegel, Haase insisted they must continue the path of fiscal consolidation, stating that finding counter-financing to compensate for “cold progression”-the reduction in real income due to inflation-is extremely difficult. Therefore, he would not make such a compensation a guaranteed promise.
The difficulty stems from the highly constrained state of the coming years’ budget. Before the summer break, the black-red coalition struggled to agree on necessary savings, notably through cutting subsidies and tax advantages. This resulted in the Coalition Committee agreeing in July only to a modest relief package of 10 billion euros until 2028. However, finance politicians within the Union, such as Florian Dorn of the CSU, are now arguing for sharper cuts, including provisions for compensating cold progression, an measure that would cost approximately 8 billion euros.
Haase is also not entirely satisfied with the current income tax reform. He considers it merely the “minimum of the minimum.” Nevertheless, he fears that the SPD and the Union cannot reach an agreement on additional budget savings necessary to fund the compensation for cold progression. He voices a warning against touching the budget reserves, noting that 4 billion euros remain in those reserves. In his view, tapping into those funds would cross a political “red line.”
