Overview
- Chancellor Friedrich Merz said raising taxes on top earners and heirs is off the table, arguing the combined burden already nears 50 percent and cautioning against further pressure on owner‑managed firms.
- CDU leaders are set to debate lifting the 42 percent income‑tax threshold to €80,000, while the SPD backs later entry points only with a higher top rate to finance relief for lower and middle incomes.
- DIW chief Marcel Fratzscher forecasts the government could ultimately lift VAT from 19 to 21 percent to raise about €30 billion a year, a step he deems socially harmful; government and coalition figures publicly reject a VAT hike.
- Budget plans show an estimated €130 billion gap across 2027–2029, keeping options such as tax reform, spending reviews and subsidy rollbacks under scrutiny.
- Social organisations warn a VAT rise would hit low‑ and middle‑income households hardest, and sector data show continued cost strains in hospitality despite the new 7 percent VAT on meals, with more transactions but smaller bills and many venues planning price increases.