German Chancellor Friedrich Merz announced sweeping tax, labor, and pension reforms aimed at increasing business flexibility while protecting the welfare state. The coalition, including the CDU/CSU parties and their SPD partners, agreed to cut income taxes by up to 10 billion euros ($11.4bn) through higher levies on high earners, with a proposed rise in retirement age beyond 67 years.
Finance Minister Lars Klingbeil of the SPD stated that the tax burden would be distributed fairly across all income levels, ensuring Germany’s economic progress while also addressing concerns from unions such as IG Metall. The coalition’s labor reforms have been met with mixed reactions, with some business organizations welcoming the changes and trade unions like IG Metall viewing them as a threat to workers’ rights.
Merz emphasized that these measures are part of efforts to strengthen Germany’s economy amid ongoing challenges, including those posed by the far-right Alternative for Germany (AfD) in upcoming regional elections. The coalition is particularly mindful of maintaining their approval ratings and addressing the AfD’s growing influence, especially in formerly communist eastern regions where they may face an unprecedented leadership.
Source: Original report
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