(de-news.net) – Germany’s federal states have been cautioned by Federal Finance Minister Lars Klingbeil (SPD) regarding the potential ending of a proposed legislative package aimed at delivering targeted tax relief. The measures include a reduction in the value-added tax (VAT) for the gastronomy sector and increases to both the commuter allowance and the flat-rate compensation for voluntary civic engagement. Klingbeil firmly rejected demands for federal compensation to offset projected revenue losses at the state level, stating unequivocally that the Federal Government would not provide financial adjustments to support state budgets.
The legislative proposal, scheduled to take effect on 1 January 2026, seeks to reduce the VAT on restaurant meals from 19 to 7 percent, raise the commuter allowance from the first kilometer, and enhance the fiscal recognition of volunteer work through an increased flatrate allowance. Despite the intended social and economic benefits, the Bundesrat has expressed significant concern over the fiscal implications of the package. Member states have warned of cumulative tax revenue shortfalls amounting to approximately 11.2 billion euros by the year 2030 and have formally requested financial compensation from the Federal Government.
Minister-President Alexander Schweitzer (SPD) of Rhineland-Palatinate responded critically to the federal stance, invoking long-standing patterns of municipal indebtedness that he attributed to unfunded federal mandates. He argued that any initiative originating from the federal level must be accompanied by appropriate financial support, emphasizing that strained local capacities risk undermining the ability of municipalities to deliver essential public services. Schweitzer further cautioned that such fiscal pressures could erode public confidence in democratic institutions, particularly in the face of rising populist sentiment.
Klingbeil’s refusal to accommodate the states’ compensation demands drew criticism from CDU parliamentary leader Jens Spahn, who called for a more constructive and cooperative approach within the governing coalition. Spahn also questioned the decision to publicly air disagreements, suggesting that such matters should have been addressed through internal dialogue and negotiation.
In order to secure the passage of the relief package, a formal agreement between the federal government and the states must be reached before the Bundesrat convenes on 20 December.
