Friedrich Merz: Solidarity surcharge should end in four years!

Friedrich Merz: Solidarity surcharge should end in four years!

On June 7, 2025, Chancellor Friedrich Merz (CDU) presented a comprehensive concept to abolish the solidarity surcharge within four years to family entrepreneurs in Berlin. According to Merz, this measure is intended to significantly relieve the burden on small and medium-sized companies in particular that pay income tax. The plans come at a time when the coalition agreement between the Union and the SPD stipulates that the solidarity surcharge will remain in place during the government's term.

Merz further explained that since 2021 only higher earners, companies and investors will be asked to pay. Around 90 percent of taxpayers are exempt from payment. In this context, the Chancellor's call for an early abolition is particularly controversial, especially since the Federal Constitutional Court rejected a complaint against the solidarity surcharge in March and confirmed its constitutionality.

Order situation for companies

As part of his statements, Merz emphasized that the planned abolition would bring lasting relief to the economy. In addition, he is planning a rapid reduction in electricity prices, which he would like to discuss in talks with Finance Minister Lars Klingbeil (SPD) for implementation in the 2025 budget. This is part of a larger plan to reduce bureaucratic burdens on companies in order to increase competitiveness.

Merz also criticized the excessive national implementation of EU directives in Germany, cited the supply chain law as an example and called for bureaucratic procedures to be simplified so as not to place additional burdens on companies.

Historical background of the solidarity surcharge

The solidarity surcharge was originally introduced in 1991 as a temporary tax to cushion the costs of German reunification and became permanent in 1995. It was initially 7.5 percent and was reduced to 5.5 percent in 1998. Although the surcharge is now only paid by a small part of the population, there is still an additional financial need for the federal government, which makes it necessary to regularly review the surcharge, according to the decision of the Federal Constitutional Court.

The discussion about the financing and social staggering of the solidarity surcharge remains current, while Merz is calling for concrete steps to relieve the burden on companies and citizens. The Chancellor is faced with the challenge of politically implementing the plans to abolish the surcharge, despite the existing contractual agreements with the SPD.