(de-news.net) – Germany’s Christian Democratic Union (CDU) faces mounting pressure to rebuild public trust after state election setbacks, with internal criticism focusing on unfulfilled campaign promises, high energy costs and the party’s response to everyday economic concerns. At the same time, conservative state ministers are challenging a proposed sugar tax. As the Federal Constitutional Court reviews Germany’s inheritance-tax rules, Finance Minister Lars Klingbeil (SPD) is pressing for greater tax fairness, while business leaders warn that reducing exemptions for inherited company assets could threaten investment, employment and family-business succession.

The CDU is holding two days of leadership discussions in Berlin following a series of setbacks in state elections, as the party confronts questions about its electoral prospects, policy priorities and public standing. Chancellor Friedrich Merz, who also chairs the party, is expected to face scrutiny over his leadership and the government’s performance. Secretary-General Christina Hoppermann said the meeting would mark the beginning of a broader effort to restore public confidence in the party and its political agenda, rather than provide an immediate solution. The September election results have served as a warning for the Christian Democrats, who are seeking to recover their traditional strength as a broad-based national party. Merz and Hoppermann are expected to address reporters later in the day.

Former Bavarian Minister-President Horst Seehofer (CSU) criticized Merz’s comments about Germany’s work ethic, arguing that broad claims about insufficient work and excessive sick leave fail to reflect the realities facing employees. Seehofer pointed to nurses working demanding night and weekend shifts, as well as Audi employees who would welcome additional work but instead have been offered severance agreements. He argued that such generalizations overlook the pressures facing workers and risk alienating people whose contributions are essential to the economy. Seehofer also mentioned the failure to deliver on campaign commitments, particularly the pledge to reduce electricity taxes for all consumers.

Dennis Radtke, chairman of the Christian Democratic Employees’ Association within the CDU, has similarly called on his party to respond more effectively to the financial pressures confronting ordinary households. He argued that the party’s inability to offer satisfactory answers to everyday economic concerns was weakening its position in the political contest with the right-leaning Alternative for Germany (AfD). Gordon Schnieder, the minister-president of Rhineland-Palatinate, has also advocated reducing electricity taxes to ease the burden of high energy prices. The measure had been included in the coalition agreement but had not been implemented, he noted. The failure to fulfill such commitments, Schnieder warned, risks further undermining public trust in the governing parties.

Merz and approximately 25 members of the CDU’s executive committee are participating in the leadership meeting. The gathering was called after the party failed for the first time to enter the state parliament in Mecklenburg-Western Pomerania, intensifying concerns about its electoral position and future political direction. The discussions come as the party faces pressure to demonstrate that it can respond to voters’ economic concerns while rebuilding confidence in its leadership and policy commitments.

Conservative opposition to a proposed sugar tax

Nine agriculture and consumer-protection ministers from states governed by the CDU and CSU have opposed plans to introduce a tax on sugar-sweetened products, adding another policy dispute to the conservative bloc’s broader debate over economic and consumer policy. In a letter dated 11 October and addressed to Merz, Chief of Staff Nina Warken and parliamentary group leader Thorsten Frei, the ministers rejected an additional consumer levy as an inappropriate form of government intervention. The letter was signed by representatives from Bavaria, Baden-Württemberg, Berlin, Hesse, North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt, Thuringia and Saxony, according to media reports.

The ministers argued that efforts to reduce sugar consumption should focus on nutrition education, public awareness, individual responsibility and innovation rather than additional taxation. They maintained that the governing coalition’s agreement emphasized voluntary measures and incentives, allowing consumers to make informed choices without incurring additional costs on selected food and beverage purchases. In their assessment, a sugar tax would depart from that approach by using state intervention to influence consumer behavior. They also questioned whether an additional levy was necessary to achieve the intended public-health objectives.

Economic concerns were another central element of the ministers’ opposition. Agricultural businesses are already facing higher costs for fertilizer and diesel, they argued, and a decline in sugar-market revenues could add to existing financial pressures. Beverage manufacturers would also face costs associated with changing product formulations to reduce sugar content. The ministers questioned whether the anticipated benefits of the proposed tax, particularly in addressing obesity, had been sufficiently established. Their objections therefore combine concerns about consumer choice and regulatory policy with questions about the potential effects on producers and manufacturers.

The dispute highlights a policy disagreement within the conservative bloc and the governing coalition. The CDU opposed a sugar tax at its national party convention in Stuttgart in February 2026, but the Union subsequently reached an agreement with the Social Democratic Party (SPD) that included such a levy. Finance Minister Lars Klingbeil had promoted the measure as a way to encourage healthier beverage choices while generating additional revenue for the federal budget. The Chancellor’s Office subsequently put the proposal on hold, leaving the measure’s future uncertain as conservative state ministers renew their opposition.

Inheritance tax reform before the constitutional court

Finance Minister Klingbeil has renewed his call for a more equitable inheritance-tax system ahead of proceedings at Germany’s Federal Constitutional Court in Karlsruhe. He argued that large fortunes worth millions or billions of euros can often be passed to heirs with little taxation, while smaller inheritances remain subject to tax. In Klingbeil’s view, this imbalance contributes to growing wealth inequality and raises questions about how the tax burden is distributed across society. The SPD chairman intends to pursue reform once the court has clarified the constitutional framework, arguing that those with greater financial resources should make larger contributions.

The court is scheduled to examine the existing inheritance-tax rules on Monday and Tuesday. Among the issues raised by Bavaria’s state government is whether certain provisions of the Inheritance and Gift Tax Act are unconstitutional because the federal government may lack the authority to establish them. The proceedings could help clarify the legal boundaries within which any future reform must operate. A ruling is not expected until several months after the hearings, leaving the immediate direction of the debate unresolved.

Klingbeil has also expressed support for restoring Germany’s wealth tax, arguing that widening disparities in asset ownership undermine the principle that economic opportunity should depend on individual achievement. He maintains that a person’s prospects should be shaped by personal effort rather than the circumstances of the family into which they were born. The argument forms part of his broader emphasis on economic fairness and the distribution of wealth. Germany does not currently levy a wealth tax, however, and its reintroduction is not part of the governing coalition’s agenda.

Business leaders defend inheritance-tax exemptions

The German Chamber of Industry and Commerce (DIHK) has defended tax exemptions for inherited business assets, warning that tighter rules could undermine investment, employment and the continuity of family-owned companies. DIHK President Peter Adrian argued that these businesses support not only their owners but also employees, apprentices and entire regional economies. He maintained that the exemptions should not be regarded as subsidies or preferential treatment, but as conditional provisions intended to protect operating businesses and preserve jobs during ownership transfers.

Adrian emphasized that the assets involved in business succession are generally tied up in productive operations rather than available as liquid funds. Machinery, industrial facilities and investments in innovation cannot necessarily be converted into cash without affecting a company’s activities. Higher inheritance-tax liabilities could therefore reduce businesses’ capacity to invest and compete, particularly when heirs must finance tax payments from assets that remain committed to the enterprise. Adrian warned that, without the existing exemptions, the tax burden could reach as much as 50 percent of the transferred value, potentially forcing heirs to sell part or all of a company to meet their obligations.

The scale of the succession challenge is already significant, according to figures cited by Adrian. German chambers of commerce conducted nearly 10,000 consultations in 2024 with businesses preparing to transfer ownership, a record number. More than one-quarter of those companies were reportedly considering closure. Adrian argued that stricter inheritance taxation would intensify these pressures at a time when many businesses are already facing difficult succession decisions. He also rejected deferred tax payments as an equivalent substitute for exemptions, maintaining that spreading liabilities over several years would still divert resources from investment, innovation and employment.

Rainer Kirchdörfer, chairman of the Foundation for Family Businesses, has likewise warned that removing exemptions for inherited operating assets could seriously damage Germany’s economic environment. He argued that the provisions are essential to the survival of family-owned companies across generations, helping preserve the country’s diverse business landscape, which includes small, medium-sized and large enterprises. In his assessment, these companies represent an important component of Germany’s economic structure, and changes to inheritance-tax rules could have consequences extending beyond individual families.

Kirchdörfer maintained that higher taxes on business assets would leave family-owned companies with fewer resources for investment and could ultimately lead to job losses. He urged policymakers to preserve the existing exemptions and avoid further weakening Germany’s investment conditions while the constitutional court examines the inheritance-tax framework. With the legal status of the current rules under review, business representatives have emphasized the importance of ensuring that any changes do not compromise corporate succession, long-term investment or employment.