Union Plans Major Tax Cuts While Targeting Welfare

The CDU and CSU have unveiled their joint election program for the 2025 Bundestag elections, focusing on significant tax cuts for citizens and businesses. At the same time, the Union aims to overhaul welfare spending, particularly targeting Bürgergeld and costs associated with migration. Party leader Friedrich Merz outlined these measures as key components of a broader strategy to reduce Germany’s financial burden and promote economic growth.

Tax Cuts and Economic Growth at the Core of the Agenda

The Union’s program promises substantial tax relief for individuals and businesses, marking a shift towards fostering economic competitiveness. Merz emphasized that the tax reductions would unfold gradually, starting with a reduction of the corporate tax rate from the current 30% to 25%, implemented in several phases. While the exact financial impact has not been disclosed by the CDU and CSU, independent experts estimate the cost of these tax reforms to reach up to 100 billion euros.

Merz defended the feasibility of these plans by pointing out the untapped borrowing potential under the Schuldenbremse (debt brake), which allows for up to 50 billion euros annually. He stressed that achieving economic growth would offset spending cuts elsewhere, ensuring fiscal sustainability without compromising key state functions.

Reform of Welfare Spending and Employment Incentives

Central to the Union’s program is the overhaul of Bürgergeld, Germany’s current welfare system. Merz criticized the growing financial burden of Bürgergeld, calling it an “exploding expenditure block” that demands urgent reform. The Union proposes replacing Bürgergeld with a “new basic security” system designed to encourage employment.

Currently, around 5.5 million people receive Bürgergeld, including 1.7 million individuals considered employable but not active in the labor market. Merz argued that transitioning even 100,000 recipients into employment could generate savings of 2 to 3 billion euros annually. He underscored the importance of fostering a culture of work and self-sufficiency as a prerequisite for national economic stability.

Migration Policy: Ending Irregular Migration and Cutting Costs

The Union’s platform places a strong emphasis on revising Germany’s migration policies to reduce state expenditures. One of the most prominent proposals is the termination of Bürgergeld payments for newly arrived Ukrainian refugees. Instead, they would receive lower benefits under the Asylum Seekers’ Benefits Act. To balance this policy, Merz pledged to grant Ukrainian refugees immediate access to the labor market and expedite the recognition of their professional qualifications.

“We give them immediate work permits and support faster acknowledgment of their skills,” Merz said, highlighting the potential economic contributions of Ukrainian refugees.

The CDU leader also called for stricter controls at Germany’s borders and a coordinated European effort to manage migration. The program includes proposals for turning away illegal migrants at the borders and addressing the influx of individuals from Syria. Merz suggested that Syrians unwilling to integrate should return home if their protection status expires, emphasizing that deportations to Syria must become feasible in the future.

Addressing the Political and Financial Landscape

Merz reiterated that, if elected, the Union would conduct a comprehensive review of Germany’s finances to determine where further savings could be made. He argued that unchecked welfare spending and irregular migration represent unsustainable financial burdens on the federal budget. The program also aims to end irregular migration into Germany, positioning asylum policy as a cornerstone of the Union’s campaign.

While Merz’s proposals have generated widespread debate, the Union maintains that reforming welfare and migration policies is essential for balancing the budget and restoring economic competitiveness. The party’s strategy reflects a clear departure from the policies of the Merkel era, particularly in the realm of migration.

Immediate Work Permits and Future Prospects

The Union’s approach to Ukrainian refugees signals a shift towards integrating asylum seekers into the labor market more quickly. By allowing immediate work permits and fast-tracking qualification recognition, Merz believes Germany can benefit from skilled labor while reducing dependency on welfare benefits. This measure, he argued, would support refugees in becoming self-sufficient and contributing to the economy rather than relying on state aid.

Challenges and Uncertainty in Coalition Prospects

Despite the ambitious nature of the Union’s program, questions remain about its viability in a coalition government. Analysts point out that implementing strict asylum policies and welfare reforms may face resistance from potential coalition partners, such as the Greens or SPD. Nevertheless, the CDU and CSU are positioning their proposals as decisive steps toward addressing Germany’s economic and financial challenges.

By combining tax cuts, welfare reforms, and stricter migration policies, the Union aims to deliver a comprehensive plan for economic revitalization. Merz emphasized that economic growth, competitiveness, and responsible spending are key to securing Germany’s future.