The budget for next year will already be a test for the traffic light coalition. It has to close a gap of 25 billion euros. In this situation, FDP leader Lindner is calling for further tax cuts. Is anyone preparing for an early exit?
If there is something that is casting its shadow in Berlin politics, it is the budget for the coming year. And these shadows are quite long and dark: according to reports, 15 to 25 billion euros are missing, maybe a little more, maybe a little less. The sum is towering even by federal standards.
Finding the money will be the government’s big test this year. If she doesn’t manage to set up a household, she can pack up. In this situation, Finance Minister and FDP leader Christian Lindner goes public with new demands for tax cuts. If the plans were implemented, further income would be lost. This would make it even more difficult for his own coalition to put the budget together. What’s that supposed to mean?
First the facts: On Easter Saturday, the dpa quoted Lindner with his demand for relief. Since citizens’ money has been increased “massively and disproportionately”, taxpayers must now also be relieved, he said. Therefore, the basic tax allowance should be increased retroactively to January 1st of this year.
This Wednesday, Lindner followed up via the “Bild” newspaper. He told the paper that he was fighting for renewed inflation compensation in wage and income tax and immediately defended himself against criticism from the SPD and the Greens. The two coalition partners primarily want to relieve the burden on small and medium incomes. But if taxes fall, high earners naturally benefit more in absolute terms than low earners.
Lindner also promised changes to income tax for 2025 and 2026. The traffic light government has reduced the wage and income tax rate for 2023 and 2024 to align the tax system with inflation, he said. He doesn’t understand why the SPD and the Greens canceled this agreement for 2025 and 2026. The otherwise threatening “cold progression” would be a “secret and therefore cowardly tax increase”.
The Greens and SPD wave it off
The contradiction is clear. The Green Party deputy Andreas Audretsch said in the ntv Frühstart: “We want to concentrate on those who don’t earn that much.” Priority would be given to those who work hard but only bring home a small salary at the end of the month.
The SPD’s financial policy spokesman, Michael Schrodi, told the Funke newspapers that it cannot be the case that top earners receive disproportionate relief. Nevertheless, he described it as useful to compensate for the cold progression.
It is not the first time that Lindner has called for tax cuts this year. Since February he has been working harder to finally abolish the solidarity surcharge. For most citizens this is already history, but top earners continue to pay it. Lindner presents an end to the tax primarily as a relief for companies.
With his demands, the finance minister and FDP leader is driving up stakes for the budget negotiations. You can now look at his arguments and agree with him or disagree with him. But the fact is that his coalition partners will hardly go along with this.
The budget negotiations would be complicated enough even without Lindner’s latest demands. What makes matters worse is that the defense budget is expected to continue to grow. Where will the money for this come from? Since the FDP rules out tax increases and easing the debt brake, the only option is to save money. Unless the economy miraculously picks up and tax revenues increase again.
But saving will be difficult. The FDP sees potential for cuts in social benefits. But that cannot be done with the SPD or the Greens. Lindner and other FDP politicians regularly point out that the state does not have a revenue problem. After all, tax revenues are at record levels.
No clear commitment to the coalition
So Lindner goes on a confrontational course to the traffic lights. The fact that the FDP takes on a kind of opposition role in the government is not new. But the fact that he is going to such great lengths with the mammoth household project still makes one sit up and take notice. Here he represents the pure FDP doctrine, the willingness to compromise tends to zero. Lindner seems to be making it count – either the SPD and the Greens meet the demands that are actually unacceptable to them or the traffic light coalition collapses.
He doesn’t say this explicitly, but he also avoids guarantees of the continued existence of the alliance. In another major interview, this time with “Zeit”, he announced that he would concentrate on “the supply side of the economy” in the new budget draft, i.e. on providing relief for companies. When asked whether he would leave the alliance if that didn’t work, Lindner didn’t give a clear no: “It’s inconceivable that nothing will happen. The country can’t afford that.”
When asked directly whether he was preparing to leave the traffic lights, Lindner did not answer “no”. Instead, he commented on the break in the social-liberal coalition in 1982, when the FDP left the government with the SPD and defected to the CDU. He said he was sure that the coalition would find common positions today. He also pointed out that the change of partner had led the FDP into a serious crisis. The FDP leaders Hans-Dietrich Genscher and Otto Graf Lambsdorff had to accept this “in order to achieve what was in the country’s interest. That always impressed me,” said Lindner.
This can at least be interpreted as flirting with an early end to the coalition – if Lindner and the FDP were otherwise unable to do the right thing for the country, he would almost have no other choice. That’s exactly how he would probably argue if the worst came to the worst. His tax plans could thus become a kind of torpedo for the coalition tanker. Devastating hits cannot be ruled out.