(de-news.net) – Germany’s governing coalition has reportedly reached a compromise on a tax on sugar-sweetened beverages, with Finance Minister Lars Klingbeil of the center-left Social Democratic Party (SPD) abandoning plans for a third tax tier and agreeing to exemptions for smaller manufacturers. The revised proposal follows the Chancellery’s decision to halt the original plans and delays implementation until July 1, 2027, six months later than initially anticipated.

Under the updated framework, producers manufacturing fewer than 70,000 liters of beverages annually would be exempt from the levy. The Government will also ask the European Commission to examine whether that threshold could be raised to one million liters a year, a move that could further limit the tax’s impact on smaller businesses. Large manufacturers, including Coca-Cola and PepsiCo, would remain fully subject to the measure, potentially resulting in substantial increases in retail prices for affected products.

The proposed tax would amount to 26 cents per liter for beverages containing at least 4.5 grams of sugar per 100 milliliters and 32 cents per liter for those containing more than 7 grams. The government has abandoned a proposed third tier that would have imposed a levy of 38 cents per liter on drinks containing more than 10 grams of sugar per 100 milliliters. The decision follows recommendations from the commission responsible for proposals to reform Germany’s statutory health insurance system.

The revised plan would exempt fruit and vegetable juices, milk, nonalcoholic beer and wine, and beverages sweetened with sugar substitutes. Consumer advocates and medical associations have long called for higher taxes on sugar-sweetened drinks, arguing for a fiscal approach to discouraging consumption. Similar taxes have already been introduced in several countries, making the German proposal part of a broader international policy debate over the health effects of sugary beverages.

Economists call for changes to inheritance tax

As Germany’s Constitutional Court prepares to hear a case concerning the country’s inheritance tax, economists are calling for a comprehensive overhaul of a system they say distributes the tax burden unevenly. The proceedings are expected to examine whether existing provisions give heirs to businesses excessive advantages compared with other recipients of inherited wealth.

Marcel Fratzscher, president of the German Institute for Economic Research (DIW), argues that the current exemptions, particularly those benefiting large fortunes, are outdated. He favors a broader approach to taxing wealth and capital income, with moderate rates and fewer exceptions. He also supports allowing taxpayers to defer payments under arrangements designed to prevent the levy from eroding the underlying assets being transferred.

Clemens Fuest, president of the ifo Institute, likewise advocates removing exemptions for business assets and owner-occupied properties while introducing more flexible payment arrangements. He considers concerns raised by business groups about the potential depletion of corporate assets overstated, arguing that an inheritance tax rate of approximately 10 percent would be manageable if accompanied by generous provisions for deferred payments. Fuest also supports treating inherited owner-occupied homes in the same way as rental properties for tax purposes. Because people commonly inherit their parents’ homes in their 50s or 60s, he argues, those properties no longer necessarily serve the same role in recipients’ lives as they did for previous generations. In his view, an exemption should be retained only for surviving spouses who already live in the property.

Both economists identify unequal treatment as a central weakness of the existing system. Medium-sized inheritances are subject to taxation, while substantial transfers of wealth through business assets can remain largely or entirely exempt. The Federal Constitutional Court is scheduled to begin hearings on the inheritance tax rules on Monday, with the treatment of business heirs among the issues under consideration.

SPD leader proposes summit to break pension reform deadlock

Meanwhile, Matthias Miersch, head of the SPD’s parliamentary group in the Bundestag, has proposed a summit to help resolve the impasse over the German government’s pension reform. He has suggested involving parliamentary groups and potentially state premiers before the Cabinet reaches a formal decision, although the precise format of such a meeting remains open for discussion. The proposal reflects an effort to broaden political participation in negotiations that have encountered resistance within the governing coalition.

Miersch has also rejected calls from parts of the conservative bloc to end unreduced pension benefits for people who have completed 45 years of contributions. His position underscores the disagreements surrounding the government’s proposed changes to the pension system and the challenge of securing agreement among coalition partners. Despite those tensions, Miersch remains confident that the Federal Government will serve its full term. He points to what he describes as a foundation of trust among senior political figures, distinguishing the current administration from the previous three-party coalition, which collapsed amid internal disputes. In his assessment, that working relationship remains an important factor in the Government’s ability to manage disagreements and continue governing.

Asked about potential SPD candidates for the next chancellorship, Miersch identified three prominent figures: Finance Minister Klingbeil, Defense Minister Boris Pistorius, and Manuela Schwesig, the Minister-President of Mecklenburg-Western Pomerania. He declined to endorse any one contender, instead emphasizing that the party has several experienced politicians whom he considers capable of taking on the candidacy.