Germany unveils sweeping economic reforms including tax changes and cryptocurrency rule

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Germany unveils sweeping economic reforms including tax changes and cryptocurrency rule
Germanys governing coalition agrees sweeping reform package on taxes pensions labour and growth
ContinuationGermanys coalition government secures 21 billion budget fix for 2027 while CDU and SPD back full pension reform
Germany’s coalition government on Friday unveiled its most sweeping economic reform package in over a decade, including plans to abolish the one-year tax-free holding period for cryptocurrencies and raise taxes on high earners, as Chancellor Friedrich Merz seeks to address stagnation and rising support for the far-right AfD. The measures, agreed after seven hours of negotiations between the CDU/CSU and SPD, mark the largest reform since Gerhard Schröder’s Agenda 2010 and come as Berlin faces pressure to shield its sluggish economy from energy shocks and years of underinvestment.
Under the draft budget for 2027, seen by Reuters, Germany plans to lift borrowing to more than €203 billion ($232 billion), a sharper rise than previously signaled, to fund increased defense spending and investment aimed at reviving growth. The government also intends to abolish the one-year tax exemption for cryptocurrency holdings, a move first reported by @disclosetv, as part of efforts to modernize fiscal policy and close loopholes.
Economists remain divided over whether the package will resolve structural weaknesses. While the coalition proposes higher taxes on the wealthy—supported by 67% of the population according to a Süddeutsche Zeitung survey—to fund relief for middle-income earners, critics argue the reforms lack ambition. “It’s a tax package, not a reform,” wrote the *Frankfurter Allgemeine Zeitung*, noting that inflation adjustments are incomplete and the political horizon is missing.
The government’s attempt to curb rising sickness absences by requiring employees to submit doctor’s notes on the first day of illness has drawn fierce backlash from physicians and unions. The German Medical Association warned the plan could backfire, increasing rather than reducing absenteeism, while the DIW economic institute cautioned that stricter rules may not address underlying workplace issues.
Political analysts suggest the reforms are as much about signaling competence as solving crises. “The content is secondary,” argued the *taz*, describing the package as a performance to demonstrate the coalition’s ability to deliver amid plummeting public trust.
With the AfD surging in polls, Merz had pledged to halve the party’s support, but the reforms fall short of that promise. The *Welt* noted that while the package is significant, it won’t fulfill one of Merz’s key pledges.
As the Bundestag prepares to debate the budget next week, the government faces resistance from both the left and right. The Left Party vowed to defy a planned ban on expropriations in Berlin, while the FDP criticized the tax hikes as counterproductive. Meanwhile, the opposition Greens demanded clearer commitments to climate investment and digital modernization.
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