(de-news.net) – The German governing coalition remains divided over proposed tax measures, particularly a levy on plastic packaging, as parliamentary negotiations over the 2027 federal budget enter their final stage. While the Union opposes the plastic tax, the CSU is seeking adjustments to several other planned tax measures, prompting the SPD to demand alternative financing proposals. Business associations and representatives of the skilled trades have also warned that the proposed legislation could increase operating costs and administrative burdens without delivering commensurate environmental benefits.

The Bundestag’s Budget Committee is holding its final adjustment session before the 2027 federal budget is submitted to Parliament for approval. The CSU is demanding changes to several proposed tax initiatives, including postponing the introduction of a sugar tax from July 1, 2027, to January 1, 2028. CSU parliamentary group leader Alexander Hoffmann has also rejected the proposed plastic tax, questioning its environmental effectiveness and describing it as economically damaging and excessively bureaucratic. In addition, he called for the planned increase in alcohol taxation, currently scheduled for January 1, 2027, to be postponed. Hoffmann argued that a genuine budget consolidation effort must address expenditure as well as revenue, particularly what he characterized as excessive social spending under the Labor Ministry and high federal personnel costs. He also maintained that the Federal Government’s revised migration policy should generate measurable savings for the federal budget.

Meanwhile, North Rhine-Westphalia Premier Hendrik Wüst (CDU) has urged Federal Finance Minister Lars Klingbeil (SPD) to clear the way for the previously proposed reduction in electricity taxation for all consumers. Wüst argued that finding ways to make everyday life more affordable was a fundamental responsibility of political leaders and identified a universal electricity tax reduction as a particularly effective measure. He called for its prompt implementation to provide a tangible signal of financial relief in 2027. The measure, estimated to provide more than 5 billion euros in relief, could strengthen economic competitiveness while supporting social cohesion by directly addressing rising energy costs. According to Wüst, households with children, small businesses such as hair salons and medium-sized automotive companies would all benefit from lower electricity expenses.

Plastic tax exposes divisions over budget financing

The proposed plastic tax remains a major point of contention within the governing coalition. Thorsten Frei, chairman of the Union parliamentary group, has firmly rejected the measure, arguing that it would produce undesirable economic and environmental consequences. Abandoning the proposal, however, would leave an estimated 670 million euro gap in the 2027 budget that would need to be addressed through alternative financing. SPD parliamentary group leader Matthias Miersch maintained that any plastic levy must achieve a demonstrable environmental steering effect. Although he acknowledged publicly expressed reservations within the coalition, he emphasized that negotiations were continuing and that the proposal had not been definitively abandoned.

Under a preliminary draft, the levy would impose a charge of 550 euros per metric ton of plastic used in packaging beginning in July 2027, with the stated objective of reducing plastic waste. Klingbeil’s budget projections anticipate additional revenue of 805 million euros in 2027 and nearly 1.5 billion euros annually from 2028 onward. The proposed charge would affect everyday products such as yogurt containers and PET bottles. While the SPD continues to support its introduction as both an environmental and fiscal measure, the Union has maintained substantial reservations about the plan.

Environment Minister demands alternative financing proposals

Federal Environment Minister Carsten Schneider (SPD) has called on the Union to present alternative proposals to compensate for the anticipated revenue shortfall if the plastic tax is abandoned. He emphasized that the coalition remained jointly responsible for submitting a constitutionally compliant budget and that withdrawing from an agreement reached by the coalition committee in the spring would require credible alternative financing. Schneider argued that the Union had an obligation to identify how the resulting budget gap could be closed before the Budget Committee completed its deliberations.

Among the available options, he identified sustained expenditure reductions, the removal of subsidies and additional revenue as possible components of a constitutionally compliant budget. The Federal Environment Ministry would support, in particular, the permanent reduction of fossil-fuel subsidies. Schneider also maintained that tax incentives should favor the use of recycled plastics, arguing that fiscal policy should simultaneously reduce plastic consumption, encourage recycling and preserve financial flexibility for future generations. Responsibility for determining the next steps would ultimately rest with the parliamentary groups.

Business associations warn of higher costs and bureaucracy

Opposition to the proposed plastic tax extends well beyond the governing coalition. More than 40 business associations, including the Federation of German Industries (BDI), the German Retail Federation (HDE), the Association of German Chambers of Industry and Commerce (DIHK), the German Chemical Industry Association (VCI), the Mechanical Engineering Industry Association (VDMA) and the German Electrical and Electronic Manufacturers’ Association (ZVEI), have called on the Federal Government to abandon the plan. In an October 29 letter to Chancellery Minister Nina Warken (CDU), the 42 organizations warned that the levy would increase administrative requirements for companies, weaken their competitive position and raise the prices of everyday consumer goods.

The associations also argued that the measure would generate additional expenditure for public administration without creating meaningful investment incentives for more sustainable packaging or expanded recycling capacity. They questioned its financial, economic and environmental rationale, maintaining that a tax on plastic packaging would not constitute an effective policy instrument in any of these areas.

The organizations further cautioned against adopting the measure through an accelerated legislative process, calling instead for proper ministerial coordination and adequate parliamentary scrutiny. They estimated that annual administrative costs for businesses could reach the mid-double-digit millions of euros and warned that companies would probably pass at least some of the additional expenses on to consumers. Rather than imposing a new levy, they advocated targeted financial incentives to improve the economic viability of sustainable packaging alternatives.

Global plastic production adds to environmental concerns

The debate takes place against the background of Germany’s substantial contribution to European plastics production and the wider environmental challenges associated with plastic waste. According to the Federal Environment Ministry, almost all collected plastic waste in Germany is recovered, either through material recycling for use in new products or through energy production. Nevertheless, substantial quantities of plastic waste continue to be exported.

Global plastic production increased sevenfold between the 1970s and 2020, reaching 367 million metric tons annually, according to earlier figures from the Federal Environment Ministry. Without further intervention, annual production could approach 600 million metric tons by 2050. Single-use products, particularly packaging, account for a substantial proportion of this output, while large quantities of plastic waste have accumulated in rivers and oceans. International efforts to establish a global agreement addressing plastic pollution ultimately failed in August 2025.

Skilled trades sector rejects additional business burdens

The skilled trades sector has also voiced opposition to the proposed levy. Jörg Dittrich, president of the German Confederation of Skilled Crafts (ZDH), argued that a tax on plastic packaging would impose additional costs and administrative obligations, particularly on food-related businesses, without delivering convincing environmental benefits. Plastic packaging remains indispensable for many traditionally manufactured food products because of hygiene requirements and the need to ensure adequate shelf life. Any additional expenses would ultimately be passed through supply chains, affecting both businesses and consumers.

Dittrich also criticized the public disagreement between the SPD and CDU/CSU, arguing that the dispute further undermined the reliability of political and regulatory conditions for businesses. Given the prevailing economic situation, he questioned why the Federal Government would seek to impose another tax burden on companies and skilled trades enterprises. Businesses instead required greater predictability and financial relief rather than recurring debates over additional costs, he maintained.

He therefore called for the plastic tax to be withdrawn and for policymakers to pursue practical alternatives capable of reducing packaging waste while accommodating the operational requirements of businesses. Such measures, he argued, should reconcile environmental objectives with the economic realities facing companies that depend on plastic packaging in their production and distribution processes.