Podium vs Print: the one per cent met the debt brake

The podium. On 12 October Friedrich Merz announced that the electricity tax should fall “for everyone” to the European minimum, households included, using “financial room in the budget” that could appear “if growth firms up”¹. His arithmetic was simple: one point of growth is worth about €10 billion in extra tax in Germany, half of it for the federal government. “Das ist genau das eine Prozent Wachstum, was uns diese Spielräume gibt”, he said: that is exactly the one per cent that gives us this room¹.

The print. On Thursday the tax estimators delivered the growth part. The government’s autumn projection now has 1.3% for this year and 1.1% for next, up from 0.5% and 0.9%³. Revenue for all levels of government in 2027 is €10.9 billion above the May estimate; for the years to 2030 the plus is €43.4 billion³. The federal share for 2027 is €4.1 billion³. Then the ministry’s own headline: “insgesamt keine Spielräume in 2027”, no room overall². Lars Klingbeil put it this way: “we gain no new room, but we do not have to close new gaps either”². The extra money flows mainly to the Länder and municipalities; at federal level, some years come in below May².

The gap. Two things sit between the podium and the print. The first is the debt brake’s cyclical component: the better the economy runs, the less the federal government may borrow, so much of the tax plus is expected to be “eaten up” by a lower borrowing limit³. The second is the bill. Cutting the electricity tax to the EU minimum for households and small firms is expected to cost about €5.4 billion a year, and the CDU/CSU’s other wish, offsetting cold progression, about €4 billion next year³. Desk arithmetic: the two together are about €9.4 billion, more than twice the federal plus, before the debt brake takes its share. For a household, the tax cut is real money: from 2.05 to 0.1 cents per kWh¹, so about €68 a year on 3,500 kWh, or about €81 with 19% VAT (desk arithmetic).

Verdict. Merz was right that growth produces tax, and the estimate confirms it. He skipped the line in the constitution that converts good times into smaller deficits. That is not a scandal; it is the rule doing what it was written to do. The useful fight now is the dull one in the Budget Committee in mid-November: which levy, which saving, which line pays for the cut³. Until someone names it, the promise is a podium and the €4.1 billion is the print. Nothing here is advice.