(de-news.net) – Germany’s governing coalition remained divided on Thursday over how to finance an electricity tax reduction for all households and businesses. The measure would save an average family an estimated 8 to 9 euros per month but cost approximately 5 billion euros in 2027, with further financing challenges expected in 2028. SPD parliamentary group leader Matthias Miersch questioned whether the outstanding issues could be resolved before parliamentary budget negotiations concluded, while CDU deputy chairman Günter Krings remained optimistic that the coalition committee meeting on 17 November could produce a compromise.

Chancellor Friedrich Merz (CDU) has reiterated his commitment to the reduction, but the coalition has yet to agree on financing; a separate Union demand for full compensation for bracket creep also remains unresolved. Despite the measure’s exclusion from the current budget settlement, Merz reportedly intends to reopen negotiations with the SPD at the November 17 coalition committee meeting. According to sources close to the Chancellor, he wants to reach an agreement and implement the reduction. CDU General Secretary Franziska Hoppermann blamed Finance Minister Lars Klingbeil (SPD) for the failure to deliver the promised relief, accusing him of favoring new taxes over tangible financial benefits for consumers. She warned that failing to honor a commitment explicitly included in the coalition agreement would undermine the Government’s credibility.

Business representatives have also increased pressure on the coalition. Christoph Ahlhaus, Federal Managing Director of the German Association for Small and Medium-Sized Businesses (BVMW), warned that abandoning central electoral commitments would damage confidence in Merz and the Federal Government, while Astrid Hamker, President of the CDU Economic Council, criticized the failure to deliver either a general electricity tax reduction or full compensation for bracket creep. Hamker argued that earlier cuts to subsidies could have created fiscal room, pointing to a June 2026 Federal Court of Auditors report that identified 32 negatively evaluated tax concessions costing approximately 12 billion euros annually.

State Premiers demand delivery on coalition commitments

North Rhine-Westphalia Premier Hendrik Wüst (CDU) urged Klingbeil to identify financing for the electricity tax reduction, describing affordable living conditions as a fundamental political responsibility. He said the measure, worth more than 5 billion euros, should be introduced promptly to ease household expenses, support businesses, and strengthen economic competitiveness and social cohesion.

Paul Ziemiak, a CDU member of the Bundestag and Secretary General of the party’s North Rhine-Westphalia branch, accused the SPD of failing to provide relief to working people facing rising costs for fuel, groceries, and electricity. He argued that the reduction should be financed through Federal Budget savings rather than additional taxes, and called on Klingbeil to reconsider his position. Ziemiak also supported raising the issue directly with Merz, saying the Union parliamentary group would back the Chancellor in seeking an agreement; continued resistance could further alienate voters, while a complete blockade of the Federal Budget had reportedly emerged as a possible pressure tactic.

Under the coalition agreement, the two Union parties and the SPD committed to permanently reducing electricity costs for businesses and consumers by at least five cents per kilowatt-hour. The agreed measures include lowering the electricity tax for everyone to the European minimum and reducing levies and grid charges.

Gordon Schnieder, Premier of Rhineland-Palatinate and Chairman of the Conference of Minister-Presidents, urged the Federal Government to reach an agreement at the November 17 meeting. He criticized Klingbeil for failing to identify financing for 2027 and subsequent years, arguing that stronger economic output and rising tax revenues could help cover the cost. Schnieder also recalled that state premiers had unanimously called for reductions benefiting households, retailers, and skilled trades, rather than limiting relief to industrial electricity prices.

Saxony Premier Michael Kretschmer (CDU) criticized the Union for failing to enforce commitments it had made during coalition negotiations, warning that the retreat would undermine public confidence. He argued that lower electricity costs were essential to Germany’s competitiveness and reiterated the coalition agreement’s target of reducing costs by at least five cents per kilowatt-hour through lower taxes, levies, and grid charges.

Saxony-Anhalt Premier Sven Schulze (CDU), a member of the party’s executive committee, said repeated reversals over electricity taxes were damaging the Union’s credibility. He also called for full compensation for bracket creep and criticized the simultaneous introduction of a sugar tax, as well as the presentation of the decision not to introduce a proposed plastic tax as a political achievement. An October CDU executive committee resolution had supported Merz’s call for lower electricity taxes for all households and businesses, but the coalition still failed to include the reduction in the 2027 Federal Budget.

Budget priorities and financing remain disputed

CDU budget policymaker Mathias Middelberg argued that reducing electricity taxes or fully compensating for bracket creep should take precedence over expanding the mothers’ pension. He said these measures would provide more immediate relief to households facing high energy costs while supporting purchasing power and economic activity.

Middelberg suggested that savings elsewhere in the Federal Budget could finance the approximately 5 billion euros required, identifying subsidy programs as a potential source. Their total volume had risen from around 8 billion euros eight years ago to approximately 60 billion euros, although he acknowledged that finding sufficient savings at short notice would be difficult. The Budget Committee was completing its final adjustments to the 2027 Federal Budget ahead of parliamentary debate and approval during the week beginning November 23, while the coalition committee was scheduled to meet on November 17.

The coalition agreement also provides for expanding the mothers’ pension through three pension points for all mothers, regardless of when their children were born. The measure is intended to ensure equal recognition and is to be financed through tax revenue as a broader societal contribution.

SPD state-level politicians Andreas Bovenschulte, Mayor of Bremen, and Andreas Dressel, Hamburg’s Finance Senator, expressed greater understanding for Klingbeil’s reluctance to approve the reduction without reliable financing. Bovenschulte said he supported the measure but considered dependable offsetting revenue necessary, potentially from taxes on plastics, sugar, or excess profits, while Dressel warned that the absence of a coherent approach to balancing revenue and expenditure was undermining confidence. Both questioned the assumption that tax reductions would automatically generate sufficient revenue to pay for themselves.

Schleswig-Holstein Premier Daniel Günther (CDU), by contrast, called for the reduction to be implemented without further delay and applied equally to private households and businesses. He reiterated the unanimous position of the state premiers that electricity should become permanently more affordable for all consumers.

Finance Minister questions long-term affordability

Klingbeil said he was not fundamentally opposed to Merz’s proposal but questioned whether it could be financed sustainably. Speaking in Berlin, he argued that the coalition needed to identify reliable funding and rejected the assumption that economic growth alone would generate sufficient long-term revenue. Merz has continued to advocate reducing the tax to the European minimum, although the Union and SPD initially implemented reductions only for selected economic sectors.

The Greens accused Merz of making commitments he could not fulfill. Parliamentary group leader Katharina Dröge said the Chancellor had promised a general electricity tax reduction only four weeks earlier, while co-leader Felix Banaszak criticized the Federal Government for lacking a coherent strategy to revive the economy or provide meaningful relief. Both argued that the coalition’s inability to agree on the measure exposed its internal divisions and weakened confidence in its policy direction.

A reduction to the European minimum would cost approximately 5.4 billion euros annually. Klingbeil has called for corresponding savings or additional revenue, while an agreement among parliamentary budget policymakers has increasingly appeared unlikely.

Consumer protection organizations also urged the CDU to address rising living costs as the heating season began, warning that high energy bills were placing additional pressure on households. The Association of German Chambers of Industry and Commerce (DIHK) similarly called for political commitments to be followed by prompt action, emphasizing that every month of continued cost pressures mattered to businesses.