For members


From climate action to ‘Soli tax’: What you need to know about Germany’s planned changes

Angela Merkel is returning from her summer break on Monday, but she's in for a busy few months ahead. From climate change action to tax amendments, this is what the government is planning.

From climate action to 'Soli tax': What you need to know about Germany's planned changes
The solidarity tax will be reduced. Photo: DPA

It’s been a busy year for the Chancellor so far due to an unsettled political climate in Germany, Brexit – and even her own personal health concerns.

So it’s no surprise that Merkel looked relaxed on her summer holiday where she's been taking a few weeks of rest with her husband.

She is set to return to work this week and faces a rocky road with three upcoming eastern state elections and issues that are dividing the population (and the government). Can Merkel's coalition survive?

What's the outlook?

The coalition (known as the grand coalition or GroKo) is made up of Merkel’s Christian Democrats (CDU) and its Bavarian sister party (CSU), along with the centre-left Social Democrats (SPD). 

Things have been shaky between the two parties from the very beginning of their most recent union following the 2017 federal election. But both parties – typically known as the Volksparteien (people’s parties) in Germany – are under increasing pressure with three regional votes coming up. 

After dismal results in recent state elections, such as Bavaria and Hesse last year, and in the European parliamentary elections in May, both parties face heavy losses when voters in Saxony and Brandenburg go to the polls on September 1st, and in Thuringia on October 27th. 

The SPD, currently in free-fall after historically low results in state elections over the past year, are looking for a new leader and there is never-ending speculation about the party pulling out of the coalition which would 'break' the government and lead to elections.

If the GroKo doesn't split apart then the next federal elections are to take place in 2021. Merkel has already said she will bow out of politics and step down as chancellor after this term ends.

Adding to the uncertainty is the possibility of a no-deal Brexit and various domestic issues concerning climate change and migration.

Merkel on her birthday, July 19th, before her summer break. Photo: DPA

Here are some of the major issues that Germany wants to tackle in the coming months:

Climate protection

This topic has been thrust into the spotlight due to action led by activists like Greta Thunberg and the Fridays for Future movement. And Germans have become increasingly concerned about the effects of climate change.

That worry has translated into soaring support for the Green party, which has been neck-and-neck with the Christian Democrats in some recent polls (and even topped a few polls).

Meanwhile, another recent survey showed German voters are in favour of drastic action to protect the climate, such as making flying more expensive and travelling by rail cheaper.

All parties are taking note of this and the Climate Cabinet will meet on September 20th to decide the government’s action plan to reduce CO2 emissions. 

CDU leader Annegret Kramp-Karrenbauer on Sunday called for an overhaul of the country's tax system in order to better align Europe's largest economy with its environmental goals.

In the Welt am Sonntag newspaper, Kramp-Karrenbauer, who is also Germany’s Defence Minister, and Union deputy leader Andreas Jung, said tackling climate change deserved to be a top priority in the government's agenda.

She said Germany should offer businesses and residents further incentives to help reduce carbon emissions, such as subsidies for the development of climate-friendly fuels and to improve the energy efficiency of buildings.

Kramp-Karrenbauer also called for the inclusion of sustainable development as a state goal in the constitution, but said she didn't support a 'CO2 tax', an idea that's been debated in recent months.

The budget 2020

How will Germany spend its cash next year? Finance Minister Olaf Scholz, of the SPD, has been calculating what Germany can afford, when and how.

But the Finance Ministry is not known for offering much flexibility. One of the main questions is: how will climate protection be financed? This will require some creative thinking, and possibly new debt – something that Germany as a country is averse to.

Discussions on the budget are likely to take place in September. 

A Fridays for Future march in Hamburg on June 14th. Photo: DPA

Basic pension

Earlier this year, Labour Minister Hubertus Heil, of the SPD, presented his plan on introducing a basic pension (Grundrente) in Germany. It would see people who have clocked up 35 years of work, raised children or cared for relatives receive a supplement to their pension. It is intended to help those who receive a small pension.

But the Union is opposed to the basic pension being paid if the person concerned is not in need – for example, if that person has a partner with a good income who can support them. The coalition agreement also provides for means testing. However, Heil (SPD) insists on the model without means testing to avoid bureaucracy.


Several planned measures for tenants and house buyers are being debated in the government. For example, Justice Minister Christine Lambrecht (SPD) wants to see that landlords have to pay back excess rent retroactively if they violate the rent brake – a controversial proposal.

There is also a planned reform of the rent index, which will be used to determine how much rent can increased by.

A housing summit is planned to take place on September 21st.

Care crisis

In order to attract more urgently needed nursing staff, the government is planning a whole range of measures. Among other things, care givers should receive better pay and have improved working conditions, according to Health Minister Jens Spahn.

READ ALSO: How Germany plans to fight its drastic shortage of care workers

But it could cost up to five billion euros per year and there have not been concrete discussions on where that money could come from. Ordinary people may face higher contributions to pay for it.

Reducing the 'Soli tax'

But there are changes ahead for taxpayers in Germany. Finance Minister Olaf Scholz presented a draft bill last week for approval to other government ministries, which would see 90 percent of taxpayers completely freed of the solidarity contribution from 2021. The tax, known as the “Soli,” amounts to 5.5 percent of income tax and corporation tax.

For 3.5 percent of taxpayers – the top earners – the Soli will still be in place at the current rate. Meanwhile, another 6.5 percent of taxpayers would see their Soli contribution reduced. 

The payment, which brought the state €18.9 billion in 2018, was first introduced in 1991 to help cover the costs of reunification and invest in infrastructure in the former East Germany. It was originally meant as a temporary measure but was made permanent in 1995.

A 'Solidary Pact' was then agreed in 2001 in a bid to financially support the eastern German states but that pact expires at the end of this year.

The CDU is pushing to get rid of the tax completely.

Schools and daycare improvement

More than €10 billion of government cash is expected to go to schools and day care centres (Kitas) in the coming years through the “Gute-Kita-Gesetz” (Good Kita Law) and the “Digitalpakt Schule” (School Digital Pact).

All of Germany's states will receive funding to improve the number of day care staff and create better working conditions and longer opening hours (which means more Kita spots) as well as pushing up education quality.

A Kita in Düsseldorf. Photo: DPA

An overview of how eager German schools have been to access and use the funds from the Digital Pact, aimed at upgrading digital equipment, should be available in autumn. The money has been available since May.

Security policy

Should the expiring mandate for the Bundeswehr (German army) mission against the terrorist group Islamic State (IS) in Syria and Iraq be extended? The CDU/CSU and Foreign Minister Heiko Maas (SPD) believe this could be a good idea but SPD faction leader Rolf Mützenich rejected an extension.

SEE ALSO: More women soldiers and less equipment: A look at Germany's army in numbers

A decision is also pending on the future of the arms export ban to Saudi Arabia, which will expire at the end of September.

International headaches

Brexit continues to cause stress for Europe and Germany has upped its preparations for a no-deal amid fears of job losses and uncertainty over the market.

Merkel has invited Boris Johnson to Berlin following his appointment as Prime Minister.

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For members


What could the Hesse elections mean for international residents?

With state elections fast approaching in the central German state and a skills shortage a key issue, we looked at the policies of all the different parties to see what they could mean for international residents.

What could the Hesse elections mean for international residents?

On October 8th, the state election will be held in the German state of Hesse – home of the banking hub of Frankfurt am Main – which could have an impact on a federal level, as well as for the state’s international residents.

With 6.4 million inhabitants, the forested central state has been ruled by the Christian Democrats (CDU) uninterrupted for the last 24 years, and is currently governed by a so-called “Black-Green” coalition led by incumbent state premier Boris Rhein alongside the Greens as junior partner.

The state’s current legislative period has been particularly turbulent, with the COVID-19 pandemic, the assassination of Walter Lübke by the far-right as well as the racist attack in Hanau when 11 people were murdered. There was also the suicide of CDU finance minister Thomas Schäfer.

READ ALSO: What is Germany doing to combat the far right after Hanau attacks?

Challenging Rhein in the elections along the Rhine River is a familiar face from national politics, Interior Minister Nancy Faeser of Olaf Scholz’s Social Democrats (SPD). Standing as the head of the Hesse branch of the SPD, Faeser hopes to come in first place and become prime minister of the wealthy state. But the polls aren’t in her favour, with the SPD currently tied neck-and-neck with the Greens at 18 percent, with the CDU significantly ahead at 30 percent.

Here’s what each party is proposing:

Social Democrats (SPD)

The SPD has decided to focus on the shortage of skills, known as the Fachkraftmangel. They claim that Hesse alone will be lacking 180,000 qualified workers in the coming years, whether those are physical labourers, factory workers, daycare workers or teachers.

Nancy Faeser (SPD), Federal Minister of the Interior/leading candidate for the Hesse elections. Photo: picture alliance/dpa | Andreas Arnold

The Social Democrats have set a number of policies aimed at making immigration easier. These include:

  • Setting diversity quotas in public offices so that “the diversity of society is reflected in state administration”

  • Free integration and German language courses, for EU and non-EU citizens

  • Simplifying the state’s official bureaucratic language and introducing multilingual aids to help people fill in the sometimes complex forms needed to register for life in Germany

  • Allowing non-EU citizens to vote in local elections after 6 years if they have permanent residency

It’s worth noting that the proposal to allow non-EU citizens to vote was initially for after just six months, though this was described as “an editorial error” and changed to six years after backlash.

READ ALSO: REVEALED: The German industries most desperate for skilled workers

Christian Democrats (CDU)

Having governed stably with the Greens through challenging times, Boris Rhein is considered a moderate conservative and has criticised any hints from within his own party that it should cooperate with the far-right AfD. After two and a half decades of state government, the CDU was never going to offer a political revolution in this election. Nevertheless, there are still some new policies which could affect international residents, including:

  • “Hessengeld”: a grant of €10,000 for first-time house buyers, with an additional €5000 for each child

  • Converting former commercial property into housing

  • Enabling access to high-speed fibre optic internet by 2030

  • Creating an independent state secretary for migration issues

  • Making compulsory “rule of law” classes available in every district, as well as introducing measures demanding sufficient German language skills


Perhaps unsurprisingly, the Greens are primarily focused on building Hesse’s capacity for renewable energy and want to make the state climate-neutral by 2035 at the latest, instead of the current target of 2045. With record polling, the current deputy state premiere Tarek Al-Wazir is presenting himself as a candidate for the state’s top job as Ministerpräsident for the first time, but it is more likely that they will govern again with the CDU as they may not have the votes for a coalition with the SPD and FDP or a left wing red-red-green coalition alongside the SPD and Left Party.

On international issues, the Greens seem to have more in common with the left-leaning SPD than their current coalition partners when it comes to international and migration-related issues. Their policies include:

  • Setting up a welcome centre for skilled international workers which helps with the recognition of foreign qualifications and with residency law

  • Reduction of bureaucracy, with forms written in simple language and provided in languages other than German

  • Expanding public transport, including hourly buses statewide during the day time and a new night bus network.

  • Letting districts decide on their own speed limits in cities

  • Write a state anti-discrimination law and introduce a special prosecutor’s office for hate crimes

  • Allowing asylum seekers to change their status to immigrants, which would allow well-integrated and qualified people to remain in Germany

Free Democrat Party (FDP)

The FDP are quite a small party in Hesse and have declared that their goal is to get over 10 percent of the vote and re-enter government alongside the CDU after nine years in opposition, though this currently seems unlikely as they don’t have enough votes for a coalition with just the CDU. Their priorities will be on business, education, and digitalisation, with policies including:

  • Recognising foreign qualifications quickly

  • Fibre optic and 5G internet for everyone in Hesse by the end of the legislative period by measures such as installing mobile internet masts inside new and renovated publicly funded buildings

  • Introducing fully digitalised e-voting by 2028

  • A digital strategy in schools implementing fast wifi statewide, alongside tablets instead of textbooks and compulsory computer science lessons.

  • Allowing all immigrants to start work immediately

This last rule is set federally, so it is unlikely to change.

Left Party

Hesse was considered the Left Party’s stronghold in western Germany for a long time having entered state parliament in 2008. The current national co-leader of the party Janine Wissler was head of Hesse’s state Left Party before taking the top job.

READ ALSO: Co-leader of Germany’s Left party steps down

But a local sexual harassment scandal, as well as infighting on a national scale, have left the far-left party wondering if it will be able to pass the 5 percent hurdle and re-enter the state parliament this time. They could potentially govern alongside the SPD and Greens like in neighbouring Thuringia. Their policies include:

  • Abolish the scandal-ridden state Office of Constitutional Protection

  • Abolish homework in schools and allow school classes to take place in widely spoken languages other than German

  • Allow workers to choose between working from home or the office

  • Simplify and digitalise public offices and introduce e-government services and citizen’s apps

  • Replace the monthly €49 Deutschland ticket with an annual so-called €365 ticket, following the model of Vienna where residents pay just €1 a day for public transport

  • Limit air traffic at Frankfurt airport to 1995 levels and stop short-term flights

  • Found a publicly owned non-profit housing company and buy or expropriate houses from corporations like Vonovia

Alternative for Germany (AfD)

Despite polling at 14 percent, the far-right AfD are very unlikely to enter state government in Hesse due to the well-established convention in German politics of democratic parties not cooperating with the far-right.

READ ALSO: Why are the far-right AfD doing so well in German polls?

According to local news website Hessenschau, the party’s manifesto (Wahlprogramm) focuses on national and international issues, without many local policies. Nonetheless, there are some policies that could affect international residents and people wanting to move to Hesse from overseas:

  • Recruit skilled workers from non-EU countries only in extreme cases

  • Digitise the housing approvals processes

  • Expanding the A3, A5, A7 and A45 motorways