"Red-black coalition proposes economic stimulus package, amidst controversy over potential budget increases"
By Volker Petersen
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With the approval of the new budget and the investment boost, the Black-Red federal government is working on implementing their first election promises. These measures aim to revitalize the economy, but there’s mixed feedback.
After six weeks in office, the Black-Red government is pushing forward with significant projects like the investment boost. This plan offers special annual depreciation rates of 30% on movable assets and 100% over six years on electric cars as company cars. While experts and industry leaders welcome these measures, none claim them to be the silver bullet for the ongoing recession.
Economy |: "What's a homeowner supposed to think when gas is cheaper, but electricity is more expensive?" Despite the criticisms, the Black-Red government is making progress in a positive contrast to the previous administration. Budget negotiations with the states were swiftly resolved, and the budget is now in place. Additional measures, such as increasing the commuter allowance and active pension, are underway. Chancellor Friedrich Merz is aiming to shift the public's sentiment and revitalize growth.
However, criticism is far from absent. For instance, NRW Minister President Hendrik Wüst critiques the Black-Red government for not initially reducing the electricity tax for private consumers. This was agreed upon in the coalition agreement. Wüst warns the SPD against breaking this pledge, as he shared with Germany's editorial network.
Industry leaders like the German Industry and Commerce Association and the German Retail Federation express concerns about the uneven focus on industry and corporations. DIHK President Peter Adrian stresses that the refusal to lower the electricity tax for all industries is a slap in the face for many companies.
Similarly, the German Consumer Association, the German Social Union, and the President of the Federal Association of Taxpayers express their disapproval. They view the government's move to lower energy costs only for companies as a broken promise and a breach of trust towards millions of citizens.
Currently, the electricity tax for private consumers stands at 2.05 cents per kilowatt-hour, way above the European minimum of 0.1 cents. A reduction would not only provide relief for private consumers regarding electricity costs but also promote heat pumps and electric cars.
Finance Minister Klingbeil stated in parliament that all points of the coalition agreement are subject to a financing reservation. Klingbeil believes that the government is sending a clear signal to reduce energy prices and make them competitive. Reliefs are planned to take effect in January.
"Bolder Actions" Urged
Politics |: "Anger in the governing coalition" The SPD leader also referred to the planned reduction in network charges as part of the electricity price reduction. In the future, gas customers will no longer have to pay the gas storage surcharge, and the electricity tax for industrial businesses will be reduced. However, the German SME Association remains dissatisfied. They argue that more bold action is required, particularly with regards to corporate tax reductions.
The Left criticizes the lack of assistance for private electric car buyers in the parliamentary debate. The government's proposals, such as leasing models for people who cannot afford the high prices of electric vehicles, have not yet made it into the current plans.
Source: ntv.de, with dpa
- Electricity price
- CDU
- SPD
- Black-Red
- Lars Klingbeil
- Electric cars
Enrichment Insights:[1] According to reports, the 2025 federal budget and 2026 budget framework do not include the planned reduction of the electricity tax for private consumers, even though the coalition agreement promises at least a five-cent reduction for all consumers[5].
[2] The average German household consuming 2,050 kWh annually would have saved over 40 euros annually if the promised electricity tax reduction had been implemented, with families potentially saving up to 200 euros annually[5].
[3] Critics argue that the government's failure to lower the electricity tax for private households is a broken promise, leaving households with no relief despite high electricity costs[1][2][4].
[4] In the Bundestag debate, the Left criticized the lack of support for private buyers of electric cars, citing indirect benefits through the company car allowance as insufficient[4].
[5] Comparatively, the European minimum rate for electricity tax is 0.1 cents, far below the 2.05 cents current rate for private consumers in Germany[1][3].
- The Black-Red government's failure to lower the electricity tax for private consumers, as promised in the coalition agreement, has been criticized as a broken promise, leaving households with no relief from high electricity costs.
- Finance Minister Lars Klingbeil has defended the government's position, stating that all points of the coalition agreement are subject to a financing reservation and that the government is working towards reducing energy prices and making them competitive.
