CDU ministers advocate for a decrease in electricity taxes across the board
The German federal government is facing criticism for not following through on a promise to reduce electricity taxes for all citizens and businesses, as outlined in the coalition agreement. The decision to only cut taxes for energy-intensive industries has sparked controversy, primarily due to budgetary constraints and political disagreements within the coalition.
According to the coalition treaty between the Christian Democratic Union (CDU) and the Social Democratic Party (SPD), a commitment was made to lower electricity taxes to the European minimum for everyone. However, the government has decided to limit the tax cut to energy-intensive industries, excluding households and small businesses.
One of the key reasons for the criticism is the government's need to maintain fiscal discipline amid record new debt and a tight federal budget. Reducing the electricity tax broadly would slash government revenue by about €5.9 billion, potentially endangering budget stability.
Political dynamics also played a significant role in the decision. While the SPD and the Greens supported extending the tax cut to households and small businesses, the CDU and Finance Minister Christian Lindner (Free Democratic Party, FDP) prioritized targeted support for industry to protect competitiveness and maintain fiscal responsibility. This disagreement led to the exclusion of households in the final decision.
The exclusion contradicts earlier electoral and coalition promises, drawing sharp criticism from business groups such as the Federation of German Energy and Water Industries (BDEW), consumer advocates, and climate activists. They argue that the higher electricity tax on households slows the adoption of climate-friendly technologies like heat pumps and electric vehicles.
Officials like Jens Spahn (CDU parliamentary leader) acknowledged the desire to reduce electricity costs for all but emphasized the need for gradual implementation due to financial prudence. They also highlighted planned measures in 2026, such as grid fee reductions and abolishing the gas storage levy, as partial fulfillment of the promise to ease energy costs for consumers.
The CDU, CSU, and SPD had announced this in the coalition agreement, but with a reservation regarding financing. CDU politician Daniel Günther also stated that the lack of understanding on the issue has dampened the initial momentum of the governing coalition.
Federal Chancellor Friedrich Merz (CDU) and Finance Minister Lars Klingbeil (SPD) have defended the course, citing budget constraints. SPD faction leader Matthias Miersch also mentioned that the coalition contract contains 'declarations of intent' and they will strive to 'realize them all to the best of their knowledge and conscience'.
The controversy surrounding the electricity tax decision has led to public outcry and accusations of broken election promises amid ongoing energy cost challenges in Germany.
The government's decision to limit electricity tax cuts to energy-intensive industries, despite commitments in the coalition agreement to reduce taxes for everyone, has sparked debate within the finance sector and raised concerns among various stakeholders. This move, opposing earlier electoral and coalition promises, may also jeopardize the competitiveness of small businesses and households, as they continue to struggle with high electricity costs.
