German coalition agrees tax deal: sugar levy to come, plastics tax dropped
Germany's governing coalition leaders agreed a tax compromise: a sugar levy will be introduced from 2028, while the plastics tax is dropped. The levy could reduce sugar beet acreage in Germany.
Leaders of the parliamentary groups in Germany's governing coalition, the conservative CDU/CSU and the Social Democrats (SPD), have agreed a compromise on several disputed tax projects. The deal also affects agriculture and sets the financial framework for the 2027 federal budget, agrarheute, a German farming news outlet, reported on 12 November.
Sugar tax from 2028
The levy on drinks with high sugar content is to apply from 1 January 2028. There are now three rates instead of two: 25 cents from 5 grams of sugar per 100 ml, 30 cents from 7 grams and 35 cents from 9 grams. Exempt are, among others, juices and spritzers without added sugar, as well as milk-based mixed drinks and plant-based drinks. Smaller producers stay tax-free up to 70,000 litres. The overall burden is nonetheless higher than what the cabinet approved in mid-October.
A rough calculation suggests the expected fall in demand for sugar could cut sugar beet cultivation in Germany by 12,000 to 15,000 hectares.
Plastics tax off the table
The plastics tax pushed by the Federal Environment Ministry appears to have been scrapped. It would have imposed 550 euros per tonne of plastic from 1 July 2027. For the 37,000 tonnes of agricultural film collected last year by the ERDE initiative alone, more than 20 million euros in tax would have been due. A previously discussed increase in the sparkling wine tax was also dropped.
Electricity tax and criticism
The cut in electricity tax of at least 5 cents per kWh, promised in the coalition agreement, will not happen. This point drew sharp criticism at a special meeting of the CDU/CSU parliamentary group on 11 November. According to BILD, CDU finance expert Olav Gutting was reportedly shocked by the outcome, saying the SPD prevailed on all its key points. Christina Stumpp, the CDU/CSU group's agricultural policy spokeswoman, said the group still views the sugar tax very critically and has the roughly 22,000 beet growers in Germany in mind.
Agriculture budget
The deal sets the framework for the final session of the Bundestag budget committee on the 2027 federal budget. Planned savings in the budget of Agriculture Minister Alois Rainer (CSU) have risen by 42 million euros to a total of 142 million euros after additional proposals.
