German chancellor Angela Merkel’s party has promised a “decade of modernisation” in an election manifesto that pledges tax relief and a quick return to balanced budgets after the massive spending splurge during the Covid-19 crisis.
“Our offer is to combine consistency in fighting climate change with economic strength and social stability,” Armin Laschet, leader of the Christian Democratic Union, said. “We will turn Germany into a carbon-neutral industrial state that safeguards jobs.”
The CDU, and its Bavarian sister party the Christian Social Union, are currently leading the polls some 100 days ahead of federal elections that will bring the curtain down on Merkel’s 16 years as chancellor and could usher in the first conservative-Green coalition in Germany’s history.
The manifesto offers a series of tax reliefs, although it is vague on how they will be funded. It foresees a 25 per cent cap on corporate taxes, currently around 30 per cent, and pledges to abolish the “solidarity surcharge”, introduced in 1991 to help pay for German reunification, for the 10 per cent of taxpayers who still pay it.
It also promises income tax relief for people on low and middle incomes, while saying the CDU wants a return to balanced budgets “as soon as possible” and to bring Germany into compliance with the Maastricht treaty by bringing its debt-to-gross domestic product ratio below 60 per cent. The party rejected any attempt to remove the “debt brake”, a limit on budget deficits anchored in the German constitution.
Yet the manifesto fails to explain how a future CDU government would finance the promised tax relief without raising taxes elsewhere, or making spending cuts. The government is already taking on a record €240bn of debt this year with another €100bn forecast for 2022, partly to pay for the aid disbursed to businesses during the pandemic.
Arguing against tax rises, Laschet said the government had injected liquidity into German companies and “it would be completely crazy to take that out again, just when we want small and medium-sized enterprises and family-run businesses to start investing again”.
He also said Germany’s pre-coronavirus experience showed you can increase revenues without raising tax rates. “Because we had economic growth, a lot of people were in employment and paying into the system.”
Instead, he argued the focus should be to remove red tape and expand access to fast broadband services. In the past 25 years, “Amazon, Google and Tesla turned into tech giants while we played bureaucratic ping-pong”, he said.
Laschet presented his party’s 140-page manifesto alongside Markus Söder, the CSU leader and prime minister of Bavaria. It was their first joint appearance before the press since Laschet prevailed in a bitter contest between them over who should run as the CDU/CSU candidate for chancellor.
While pledging to implement the government’s existing goal of cutting greenhouse gas emissions to net zero by 2045, they face a strong challenge from the Greens, who enjoyed a stunning surge in popularity after naming 40-year-old Annalena Baerbock as their candidate for chancellor. A series of slip-ups have recently knocked the Greens off their perch.
“The Greens’ aura of invincibility is over,” said Söder. “The Germans won’t entrust the chancellery to the Greens — they have a lot of ideas but absolutely no experience.”