Andreas Bovenschulte, the President of the Federal Council for the SPD party, has called for a temporary suspension of the debt brake in order to finance the planned tax reform. He warned that resistance would come from the federal states (Länder) if their lost revenue streams are not adequately compensated for by the federal government.
The Bremer Mayor highlighted that over 50 percent of income tax goes directly to the Länder and local authorities, making it impossible for current budgets to absorb any losses without external support. Bovenschulte stressed that either the federal level must commit to counter-financing for these entities or negotiations within the Federal Council will become exceedingly difficult, potentially forcing states to reject the entire reform proposal.
Critiquing the government’s attempts to cover revenue shortfalls solely through austerity measures, Bovenschulte voiced strong opposition to cutting tax subsidies. He argued against eliminating benefits such as the “handyman bonus,” stating that removing these reliefs would negate existing support for citizens elsewhere and likely increase illegal under-the-table work (Schwarzarbeit). Similarly, he rejected proposals to abolish privileges like company car allowances, asserting that no state or municipal leader could agree without severely escalating the current economic crisis and leading to significant job losses.
As a viable alternative, Bovenschulte proposed utilizing credit financing for a transitional period. He argued for an honest assessment-that unfunded tax revenue losses would necessarily need temporary credit backing until proper compensatory measures are implemented. Ultimately, he concluded that a limited suspension of the debt brake would be preferable to having the essential tax reform fail entirely in federal council negotiations.
Beyond the tax agenda, Bovenschulte also threatened state resistance against other pending government reforms. These policies significantly affect the interests of both Länder and local authorities, making blanket acceptance impossible. Regarding health insurance policy changes, he pointed out numerous burdens they would impose on patients and municipalities, anticipating that the states would demand the involvement of the mediation committee (Vermittlungsausschuss). A similar concern was raised regarding care policy.
When accused of merely trying to block necessary governmental reforms, Bovenschulte refuted this claim. He clarified that his opposition stems from the negative transfer of costs; specifically, if austerity measures in elder care forced expenses from health insurance into social welfare aid, it would relieve one problem for the health minister while creating a major new crisis for mayors and district administrators-a consequence they would not accept.
