The Union has agreed to certain planned tax increases for associations and adopted other controversial tax decisions within ongoing negotiations for a reform package. This understanding was revealed in internal emails exchanged between the Chancellery and the Federal Ministry of Finance, as cited by the “Handelsblatt”.
According to a memo from the Chancellery to the Ministry of Finance, dated April 10th, concerning the exchange of budget documents, the internal correspondence confirmed that “in our view, both table subsidies No. 15 and No. 17 are agreed upon.” The accompanying list detailed the “reduction of tax subsidies/tax privileges,” specifically citing a decrease in the tax-free allowance for associations and a modification to the tax-free allowance for profits derived from business liquidations.
The Union had previously expressed strong criticism against the tax law drafted by Finance Minister Lars Klingbeil (SPD). Initially, they had argued that the planned income tax reliefs were insufficient. Subsequently, Union representatives had critiqued the second portion of the law, which introduced minor tax increases to counter-finance the reforms-such as lowering the allowance for associations or removing the tax-free allowance for staff discounts. The Union claimed these measures had not been finalized by the coalition.
However, sources within the government state that these measures, which the Union had suddenly challenged, were jointly approved on April 12th during a meeting of the Coalition Committee at Villa Borsig. Furthermore, a subsequent high-level meeting between Union and SPD leaders took place at the Chancellery on June 23rd, where the list was reaffirmed. As a result, the SPD has shown frustration over the Union’s sudden opposition to the tax decisions. One SPD politician commented that “the Union’s behavior is certainly not confidence-building.”
