Germany's government coalition has agreed to postpone the introduction of a sugar tax on sweet drinks and abandon a new plastic packaging tax in 2027. However, the parties have not yet found funds for a general reduction in electricity tax.
This was reported by Tagesschau on November 11, following negotiations between the Christian Democratic Union/Christian Social Union and the Social Democratic Party of Germany on the 2027 federal budget.
According to the agreements reached, the tax on high-sugar drinks is to be introduced from January 1, 2028, instead of July 1, 2027. It will apply to sweetened carbonated drinks, energy drinks, iced teas, and fruit drinks with added sugar.
The coalition also changed the tax mechanism: instead of two rates, three levels are provided based on sugar content. The postponement is intended to give manufacturers more time to adapt recipes and production.
The planned plastic packaging tax for 2027 has been abandoned. This initiative was expected to provide additional budget revenue but caused disputes among coalition partners.
The issue of reducing electricity tax for all consumers remains unresolved. Chancellor Friedrich Merz had called for reducing it to the minimum level allowed by EU legislation. However, around €5.4 billion per year would need to be found to implement this initiative.
Currently, reduced rates apply mainly to industrial enterprises, as well as agriculture and forestry. Extending the benefit to households is not yet agreed, so the expected reduction in electricity costs for the population remains uncertain.
At the same time, the parties agreed to soften some of the planned cuts in social spending. In particular, substantial funding for housing benefit (Wohngeld), parental allowance (Elterngeld), and certain payments to families with children is to be retained.
Final budget decisions still need to go through parliamentary procedure. On November 12, the Bundestag budget committee is due to complete final adjustments to the draft, and the budget vote is scheduled for the end of November.
Based on materials from: Tagesschau, Handelsblatt
