(de-news.net) – Boris Rhein (CDU), the Minister-President of Hesse, has argued that Germany’s current system of interstate fiscal equalization requires a fundamental overhaul, explicitly linking the need for reform to his state’s expanding debt burden. In statements reported by the media, he characterized it as economically unsound for a state to incur additional borrowing obligations in order to finance mandatory transfers under the existing equalization framework, suggesting that such a practice undermines principles of fiscal responsibility.
Rhein emphasized that Hesse has not received any funds from the equalization mechanism for nearly eight decades, despite having contributed more than 75 billion euros over that period. He maintained that these sustained outflows have enabled recipient states to finance public services and policy initiatives that Hesse itself has been unable to provide because of its comparatively constrained fiscal position. In his assessment, this dynamic has produced a structural imbalance within the system, one that he described as increasingly difficult to justify and progressively less functional over time.
Looking ahead, Rhein contended that any future financial assistance from donor states should be conditional upon clear and verifiable efforts by recipient states to strengthen their own fiscal capacity. He framed this approach as a deliberate shift away from long-term, unconditional transfers toward a model of support designed to encourage self-reliance. Within this logic, he argued that future allocations should be explicitly tied to measurable reform outcomes, including demonstrable progress in reducing public debt and improving administrative efficiency.
Rhein further suggested that revising the fiscal equalization framework could serve as a catalyst for broader administrative modernization across Germany, extending the impact of reform beyond fiscal relations alone. At the same time, he called for the introduction of a cap on contributions from donor states, reasoning that jurisdictions compelled to borrow in order to meet their own obligations should not be expected to transfer financial resources to other states.
