Controversial topic of electricity tax: Coalition under pressure before crucial meeting!

Controversial topic of electricity tax: Coalition under pressure before crucial meeting!

On July 2, 2025, the coalition committee of the Union and the SPD will meet in Berlin, and one of the hottest topics on the table is the reduction in electricity tax. Federal Chancellor Friedrich Merz (CDU) and Vice Chancellor Lars Klingbeil (SPD) are at the center of the discussion. Merz is determined and emphasizes that he is not only interested in crisis management, but also in sustainable solutions for citizens. However, Klingbeil goes into the meeting weakened after an election as SPD chairman, which brought additional tensions within the coalition. Also new is Bärbel Bas, who is now taking part in the coalition committee as co-party leader of the SPD and could bring a breath of fresh air to the meeting.

A central concern of the coalition is the planned reduction in electricity taxes, especially for consumers. The cabinet plans to introduce relief in energy prices from January 1, 2026, which includes a reduction in network fees and the abolition of the gas storage levy. The reduction in electricity tax for industry as well as agriculture and forestry is to be “permanent”, but a nationwide reduction for all consumers is currently viewed as financially challenging. Criticism of this regulation comes from both business associations and the Union's own ranks. Merz is calling for more clarity and is open to a possible expansion if appropriate counter-financing can be secured.

Challenges and demands

The demands that arise from the discussion are complex. According to estimates, cutting electricity taxes for all consumers would cost 5.4 billion euros, meaning the coalition would have to put other projects on hold to finance this amount. The economy is pushing for clear perspectives and relief for energy and labor costs, while the discussion about citizens' money remains no less heated. Merz and Klingbeil see savings potential of 1.5 billion euros in the coming year, and later even 4.5 billion euros. Citizens' money, which has so far cost around 3.9 billion euros, is being criticized and the Union is pushing for reform.

In addition to citizens' money, Merz and Klingbeil are also arguing about the introduction of the mother's pension, which is due to come into force in 2028. Here, CSU boss Markus Söder is pushing for earlier implementation, while the Taxpayers' Association considers the demand to be irresponsible. In contrast, the mother's pension is considered necessary by the Joint Association due to the high poverty rates among older women.

Look at international electricity prices

The rising energy prices in Germany are a hot potato in international comparison. Loud stromvkation.de Industrial companies in Germany paid around 20.3 cents per kilowatt hour in 2023, while comparable prices in countries such as the USA or China were between 8.4 and 11.3 cents. Despite slight reductions in 2024, German prices remain above the level of their competitors. This clearly shows that the German industrial location is facing a challenge that is also noticeable for consumers.

To address the problem, different political actors are implementing different strategies: The CDU/CSU advocates a moderate reduction in electricity taxes in order to relieve the burden on both households and companies. In contrast, the SPD is pushing for alternative solutions such as “climate money” to primarily support low-income households. Meanwhile, the AfD is also calling for a drastic reduction or even complete abolition of electricity taxes.

The challenges arising from the discussions in the coalition committee are complex and far-reaching. Citizens can be curious to see what solutions Merz and Klingbeil will ultimately present to counteract the high burden of energy prices and at the same time set the course for a stable and fair economic structure. Time will tell whether the political promises can be implemented and how the coalition will work together in the face of public pressure.