Following the failure of the federal government’s €1,000 “relief premium” initiative in the Bundesrat, the Greens parliamentary group leader, Katharina Dröge, is calling for significant reforms and tax relief measures in Germany’s income tax system.
Speaking to the Funke newspaper group, Dröge stated that reforming income tax is advisable, provided the changes specifically target and alleviate the burdens on lower and middle-income earners. Her concrete proposals include raising the basic tax allowance by €500 and increasing the employee lump-sum amount to €1,500. Crucially, she emphasized that while lower and middle incomes require support, extremely high incomes should bear greater contributions to public funding.
Dröge used the rejection of the relief premium by the Bundesrat as evidence that the federal government must learn from its mistakes. She criticized the ruling coalition, urging that rather than continuing to push a failed concept and creating further political setbacks, the parties should seize the opportunity to change course. In her view, it is finally time for sensible crisis policy that genuinely and equitably supports both individuals and businesses.
Aside from tax reform, Dröge also demanded that the electricity tax be lowered, arguing that this would help both families and small and medium-sized enterprises (SMEs) while simultaneously encouraging the transition to climate-friendly technologies. Furthermore, she called the failure to adjust health insurance contributions a “big mistake and unjust” noting that such a cut would benefit the lowest-earning segments the most.
The underlying debate centers on the “relief premium” an initiative proposed by the black-red government (under Chancellor Friedrich Merz and Deputy Chancellor Lars Klingbeil). The scheme would have allowed employers to voluntarily pay their employees up to €1,000 tax-free over a specific period, allowing companies to deduct the expenditure as operating costs. The Bundesrat rejected this measure on Friday; only four of the sixteen federal states approved the plan, which had already faced criticism from many major business representatives.
The failure and the proposed cooling off period were echoed by other political figures; including Markus Söder (CSU) and Manuela Schwesig (SPD) agreed over the weekend to abandon the idea of the premium and consequently not invoke the mediation committee between the Bundestag and the Bundesrat.
