Germany delays sugar tax and shelves electricity tax cut

Germany’s governing coalition has postponed a planned sugar tax to the start of 2028 and dropped a plastic packaging tax for next year, while a cut in electricity taxes has been shelved again. The changes came just before budget talks for the coming year began on Thursday, 12 November.

What happened

According to The Local Germany’s daily roundup, members of the black-red federal coalition (the CDU/CSU alliance and the Social Democrats, SPD) were due to begin budget deliberations on Thursday. Before talks even started, a last-minute compromise changed the government’s tax plans for 2027.

The sugar tax on heavily sweetened drinks will now come at the beginning of 2028, six months later than planned. Thorsten Frei (CDU), who leads the Union parliamentary group, announced the delay late on Wednesday evening. A planned new tax on plastic packaging has been rejected for the coming year.

A reduction in electricity taxes has also been put on hold again. Chancellor Friedrich Merz had strongly supported it, and the coalition had promised it earlier. According to The Local, it returned to the agenda more recently as the CDU tried to rebuild trust after poor results in eastern state elections and in Berlin.

The roundup also covered several other stories:

• Residence rights: The SPD parliamentary group wants refugees who work, study or complete vocational training to get a more secure right to remain.
• Gas reserve: The government approved a draft law for a strategic gas reserve.
• Bundeswehr: A study found widespread verbal sexual harassment in the armed forces.
• Business: Allianz and Siemens reported record profits.

What it means for you

Taxes and bills

If you buy sugary soft drinks, the postponement means no new tax on them until 2028. The plastic packaging tax will not arrive next year either. The shelved electricity tax cut means no relief from that measure for now. The Local also links to a report that electricity and gas bills are expected to rise in early 2027, so it is worth checking your own supplier’s notices.

Residence rights for refugees

Under the SPD proposal, existing provisions for people with a long-term Duldung (tolerated status, meaning deportation is suspended) would be extended to recognised refugees holding temporary humanitarian permits. The Local says several hundred thousand people, particularly Syrians and Ukrainians, could benefit. This is a proposal only, not law.

Four groups would qualify:

• Employees who pay social insurance and cover most of their living costs, including those outside traditional skilled occupations.
• Apprentices and university students, even if they receive state support.
• School pupils with realistic prospects of graduating and integrating.
• People who cannot fully support themselves because they care for young children or relatives.

The SPD also says that people who make no effort to integrate, break rules or commit crimes should leave Germany.

Gas reserve and your gas bill

The draft law would create a strategic gas reserve of 24 terawatt-hours, about 10 percent of national storage capacity. It would replace the mandatory storage targets introduced after Russia’s invasion of Ukraine and would operate from 2027, subject to parliamentary approval. The federal energy regulator could release the gas after sabotage, a critical infrastructure failure or other exceptional events.

The Local reports that the reserve is expected to cost €247 million to €405 million a year over ten years, funded through a consumer surcharge. That could raise household gas bills by around 0.3 to 0.5 percent. Energy Minister Katherina Reiche said the scheme protects against crises rather than high prices. Storage facilities are currently 59 percent full, below the EU average of nearly 75 percent and the national target of 70 percent by 1 November. The government still considers supplies secure this winter.

Bundeswehr study

The study found that 72 percent of women and 31 percent of men in the armed forces had experienced verbal sexual harassment at least once. Defence Minister Boris Pistorius announced a “zero tolerance” approach and a 34-point action plan, including an independent counselling centre outside the chain of command. Green MP Sara Nanni said this does not go far enough and wants an external body with investigative and disciplinary powers.

What to watch next

• The outcome of the budget talks, where the tax changes will be settled for 2027.
• Parliamentary approval of the gas reserve, which is required before it can start in 2027.
• Whether the SPD residence proposal gains support from its coalition partner. The source does not say how the CDU/CSU views it.
• Full Allianz results for the first nine months and the third quarter, due on Thursday.

Source: The Local Germany