CDU-led states threaten to block Chancellor Merz's new tax package

Following poor results for the CDU in eastern state elections, Chancellor Friedrich Merz and Finance Minister Lars Klingbeil introduced a tax package featuring a sugar tax and new charges on plastics and crypto assets, alongside a modest overhaul of income tax. CDU leaders of several federal states, such as Mario Voigt of Düren, Boris Rhein of Hesse, and Manuel Hagel of Baden-Württemberg, have signaled that their state delegations in the Bundesrat will withhold support.

They contend that rising living expenses already strain households and that the government should prioritize spending cuts, bureaucracy reduction and growth-friendly policies. The dissent extends to other CDU premiers, including Michael Kretschmer of Saxony and Daniel Günther of Schleswig-Holstein, who echo the call for a joint federal-state agenda to ease the tax burden. If enough CDU-led states oppose the measures, the Bundesrat could block or delay the reforms even after a Bundestag majority is secured. The standoff highlights growing tensions within the governing coalition over fiscal direction.