San Francisco Frontiers - German sugar tax sparks new government row

The two parties have repeatedly clashed since forming their latest coalition in May last year. The CDU/CSU tends to take a more pro-business and fiscally cautious line, while the SPD has proposed higher taxes for the wealthy.

SPD Vice Chancellor Lars Klingbeil, who also heads the finance ministry, was earlier this year rebuked by Economy Minister Katherina Reiche of the CDU for suggesting a windfall tax on energy companies benefitting from the war in the Middle East.

On Thursday, government sources speaking on condition of anonymity said the finance ministry had now come up with plans for a sugar tax that were not viable.

The draft was not "capable of securing a majority within the government in its current form", they said.

Speaking to news portal ZDFheute, Klingbeil said a sugar tax remained a key aim.

"We agreed to introduce a sugar tax," he said. "And we will do it. We want to strengthen preventive healthcare and protect our children."

The coalition had agreed to introduce a sugar tax from 2027 as part of a cost-cutting package for Germany's statutory health insurance system.

Industry bodies including the German Brewers' Associations and the Association of Non-Alcoholic Beverages have sharply criticised the plans.

Doctors' groups, including the German Medical Association, say a sugar tax would be good for public health.

But the finance ministry's proposal seen by AFP wanted to tax sweetest drinks at 38 cents ($0.44) a litre -- more than the 32 cents suggested by a government-appointed commission tasked with the issue.

CDU MP Caroline Bosbach told the Tagesspiegel newspaper she was glad that Germany's Chancellor Friedrich Merz and his office had appeared to "hit the emergency brake".

Bavarian state Agricultural Minister Michaela Kaniber of the CSU, the CDU's Bavarian sister party, went further.

"We shouldn't just stop this draft," she said. "We should scrap this tax altogether."

R.Moore--SFF