Government Warns of Coalition Agreement Breach Over Electricity Tax

The German government is currently facing tensions regarding the planned reduction of the electricity tax, a key promise made during the federal election campaign. This reduction was explicitly outlined in the coalition agreement between the CDU, CSU, and SPD. In light of this, Wüst expressed concern that any failure to implement this reduction could lead to a significant breach of the coalition agreement.

Wüst's remarks indirectly criticized the entire federal government. Both a spokesperson for Chancellor Friedrich Merz and for Economic Minister Katherina Reiche, both of the CDU party, have justified the government's decision to split the relief measures due to budget constraints. They also pointed out that the cabinet had unanimously passed the budget proposal.

In the coalition agreement, the parties had agreed to lower the electricity tax for all consumers to the European minimum level. However, this reduction is now postponed. Currently, three relief measures are scheduled to take effect on January 1, 2026: consumers will be exempt from the costs of the gas storage levy; the reduction of the electricity tax for industries, agriculture, and forestry will be 'stabilized'; and the federal government plans to cover a larger share of the costs for network expansion, which are currently funded through electricity prices.

Economic Minister Reiche stated that the government is acting where there is the greatest pressure to strengthen Germany's economic position and ensure the competitiveness of companies. This might mean that consumers will face fewer benefits in this regard.

The CDU's labor wing has voiced strong opposition, asserting that the electricity tax should be lowered for everyone. Alexander Hoffmann, the head of the CSU parliamentary group, emphasized that this relief is necessary not only for industry and agriculture but also for all economic sectors and consumers who are suffering from high energy prices. CDU General Secretary Carsten Linnemann also mentioned that this reduction was intended as compensation for the CO2 tax and is essential for the acceptance of the energy transition.

Dennis Radtke, the chair of the CDU's labor wing, remarked that social justice should be measured by how we treat those who are less fortunate. He criticized the government's decision on the electricity tax as failing to meet this standard. Radtke suggested that if financial flexibility is lacking, it would be more honest to discuss expanding the parental allowance rather than imposing further burdens on low and middle-income earners.

Opposition parties, including the Greens, have expressed their outrage, labeling Chancellor Merz as the 'Chancellor of Broken Promises'.