Several state prime ministers have issued warnings to the federal government against income tax reforms that would financially disadvantage the states. Andreas Bovenschulte, the President of the Bundesrat and Mayor of Bremen (SPD), told the newspaper that he would not be able to agree to any tax reform that would cause noticeable revenue losses for the state of Bremen and its two cities. A colleague from Saarland, Anke Rehlinger (SPD), expressed a similar view, stating that no federal state could bear a billon-dollar burden on its budget, even with the best intentions. Furthermore, Hessens Ministerpräsident, Boris Rhein (CDU), remarked that the states’ budgets were already at their limit, and in some cases, even exceeded it. He stated that it was no longer a matter of willingness but of capability. Rhein also referred to the principle established by the federal government in the coalition agreement: “He who orders pays”.
While fundamentally supporting the federal government’s relief plans, these three state leaders demand compensation for any resulting tax losses. Bovenschulte indicated his strong support for lightening the burden on small and medium incomes, but stressed that any revenue losses would need to be offset by increased income in other areas. As an example, he suggested reforming the inheritance tax or reinstating the wealth tax.
Rehlinger urged the federal government to prioritize all efforts toward economic growth. She expressed concern over the Union’s strategy, specifically what she considered the Ministry of Finance’s financial tightrope walk, calling it questionable. This position came after several CDU and CSU politicians recently ruled out increasing taxes on high incomes or wealth, instead advocating for spending cuts.
