German Chancellor Merz Rules Out Tax Increases Despite €30 Billion Deficit

German Chancellor Friedrich Merz has firmly ruled out any tax increases despite a growing budget deficit and pressure from his coalition partner, the Social Democratic Party (SPD), which has suggested raising taxes on top earners to address a projected 30 billion euro shortfall in 2027. Merz emphasized that the coalition agreement explicitly forbids tax hikes, a stance supported by CSU leader Markus Söder, who highlighted the need for tax cuts to maintain Germany's economic competitiveness. While acknowledging differing views within the coalition, Merz stressed the importance of focusing on shared goals and responsible governance. To stimulate the economy, Merz proposed encouraging seniors to remain in the workforce through a new voluntary pension scheme allowing retired workers to earn up to 2,000 euros monthly tax-free on top of their pension. The coalition has already approved tax cuts exceeding 45 billion euros between 2025 and 2029 aimed at boosting corporate investment. Despite the fiscal challenges posed by recession, high energy costs, labor shortages, and international competition, the Chancellor insists on working more and increasing productivity rather than raising taxes.