The planned increase in taxes on tobacco, alcohol and sparkling wine is met with resistance in the Federal Council. “I reject the tax increases that are planned,” said Hesse’s Prime Minister Boris Rhein (CDU) in the state chamber. Instead, several countries are calling for more relief at the gas station and fuel prices below two euros. Mecklenburg-Western Pomerania's head of government Manuela Schwesig urged Chancellor Friedrich Merz to give the states a say in reforms. In a survey, two out of three citizens doubted that Merz would be able to follow through on his reform course.
The reason for the debate in the Federal Council was the first discussion of the 2027 federal budget with expenditure of 555.4 billion euros. In the core budget alone, debts of 118.7 billion euros are to be incurred. There are also special debts for infrastructure, climate neutrality and the Bundeswehr. The tax increases are intended to help plug financial holes. A new plastic tax as well as higher taxes on tobacco, alcohol and sparkling wine are planned. A sugar tax is also being prepared. But details are open.
The wine region of Hesse is rebelling
Prime Minister Rhine said that a tax increase on sparkling wine would hit Hesse particularly hard as a wine country. Rhein rejected a sugar tax as a “burden for medium-sized beverage manufacturers”. With tax increases, the price crisis would become “a serious political crisis,” said the CDU politician. His Thuringian colleague Mario Voigt (CDU) also told “Bild”: “I don’t believe in tax increases in these times.” Voigt specified in the “Handelsblatt” that food in particular should not be subject to any additional burden.
Last week, Rhein had already turned a corner from the planned tax increases to the fuel discount: “What the state gives back at the pump, it must not be repeated elsewhere,” said Rhein. In fact, several countries want greater relief for drivers, even if that would be expensive.
“Fuel under two euros”
SPD politician Schwesig said the new fuel discount of 17 cents per liter is important for people. «But it won't be enough. In my opinion, the fuel needs to be under two euros again. Voigt also mentioned the two-euro mark in the Federal Council: “Energy policy is the social question of this time.”
Bremen's mayor Andreas Bovenschulte (SPD) pointed out: "We cannot spend billions every time there is a new oil price shock to make gasoline and diesel cheaper across the board." More targeted relief is needed. Bavaria's Prime Minister Markus Söder (CSU) calls for a fundamental approach for permanently lower energy prices: "We have to talk about CO2 pricing and all price rules that make energy more expensive for the state in Germany."
“Merz should invite the Prime Minister”
With a view to the government's reform course, Schwesig called on the Chancellor to involve the states. “I expect that the Chancellor and the Federal Government will now also invite Prime Ministers and talk about social reforms,” said the SPD politician on ARD. These are important for social stability in the country. “I don’t want labor costs to continue to rise,” said Schwesig. She advocated looking for savings opportunities in the system.
CDU politician Voigt also wants a say, in his case at party level: “We as Prime Ministers will clearly formulate what the Union must concentrate on in Berlin’s government action.” Voigt called for “a new programmatic beginning”. The concept will then be discussed as a Union with the SPD. The CDU presidium wants to discuss the issue at a closed meeting in Berlin on October 11th. A series of election defeats is putting CDU leader Merz under pressure, even though the eight CDU prime ministers initially supported him.
Many citizens are skeptical
Many citizens have little confidence in Merz and his reform course. In the ZDF “Politbarometer” 67 percent of those surveyed said that they did not expect Merz to be successful in continuing his reforms. Only 28 percent expect successful implementation. 65 percent of those surveyed expect Merz's chancellorship to end early. Only 31 percent believe in a full term until 2029. Only 17 percent rated his work as rather good, 79 percent as rather bad.
