German coalition backtracks on taxes, welfare in budget talks, senior lawmakers say

BERLIN, Nov 11 (Reuters) - German Chancellor Friedrich Merz’s governing coalition backtracked on some contentious tax and welfare reforms on Wednesday, postponing a tax on sugary drinks and shelving a plastic levy, according to a joint statement from three senior lawmakers.

Merz’s conservative CDU/CSU bloc and its senior centre-left SPD partners are this week resolving the last remaining issues for the 2027 half-trillion-euro federal budget.

• The tax on sugary drinks will be introduced in 2028 instead of mid-2027.

• A planned tax on plastic packaging will not be introduced for now.

• Lawmakers have not found funds to finance a planned electricity tax cut for all consumers, a plan that Merz in particular had championed. Some business sectors already enjoy the European minimum tax rate of 0.05 cents per kilowatt-hour.

• The coalition agreed to reverse some planned welfare cuts, including payments for low-income parents.

• The government earlier this year proposed a 2027 federal budget worth €555.4 billion ($616 billion) to parliament.

• Germany is trying to help its economy recover from war-related energy shocks and ramp up defence spending after decades of under-investment.

($1 = €0.9018)

(Reporting by Thomas Seythal; editing by Lincoln Feast.)