Germany's Coalition Government Plans Energy Cost Cuts and Tax Reforms

Germany's coalition government, consisting of CDU/CSU and SPD, has announced its agenda to tackle economic challenges through various tax and energy policy reforms. The coalition agreement, named "Responsibility for Germany," prioritizes reducing energy costs for industries and consumers by at least five cents per kilowatt hour, along with the elimination of the gas storage tax and network fees. To encourage the adoption of electric vehicles, purchase incentives will be reintroduced, including a ten-year tax exemption for electric cars. The coalition has also accelerated the deadline for phasing out coal to 2030. Regarding fiscal policy, the coalition intends to alleviate the financial strain on citizens by lowering taxes for low and middle-income earners. Overtime pay will see increased net income through tax exemptions on bonuses. The VAT for food in the gastronomy sector will be permanently reduced to 7% starting in January of next year. Furthermore, the government plans to reinstate the diesel subsidy for agriculture and decrease corporate tax, but not before 2028.