Merz Promised No Tax Rises. Now Germany Is Debating Sugar, Crypto and Plastic Levies—Is This a Broken Promise?
Germany’s coalition is advancing or debating a broad drinks levy, an end to the one-year crypto exemption and a national plastic charge despite Merz’s no-tax-rise language. Some measures are approved principles, others are drafts—and “tax” versus “levy” does not settle the political promise.
German Chancellor Friedrich Merz repeatedly said taxes would not rise under his government. His coalition is now advancing or debating new charges on sweetened drinks, cryptocurrency gains and plastic packaging.
Is that an obvious broken promise? Politically, the question is serious. Legally and procedurally, the answer depends on which measure is being discussed and what “tax increase” was understood to mean.
The drinks proposal is the most concrete current flashpoint. Germany’s cabinet approved the principle of a levy on sugar-sweetened beverages from 2028 as part of health-insurance financing and budget consolidation. Draft Finance Ministry details reported by Bild and Deutsche Welle would create rates of roughly €0.26 to €0.38 per liter depending on sugar content.
The reported draft goes beyond ordinary sugary cola. Artificially sweetened drinks such as Coke Zero could face the lower rate despite containing no sugar. Fruit juice from concentrate, milk-based drinks, plant alternatives, alcohol-free beer and powders intended to be mixed with water could also be covered. The proposal remains contested inside the government, particularly by the Agriculture Ministry and conservative politicians.
That dispute exposes the policy’s two possible identities. Public-health advocates say a broad levy encourages manufacturers to reduce sweetness, not merely replace sugar with another sweetener, and can help fund health costs associated with obesity and diabetes. Critics argue that taxing zero-sugar products weakens the health rationale and reveals a revenue measure dressed in medical language.
International evidence suggests beverage taxes can reduce purchases and encourage reformulation, but design matters. A threshold based on sugar content rewards lower-sugar recipes. A flat charge on artificial sweeteners pursues a different goal and may discourage consumers from switching away from sugar. Exemptions can produce lobbying rather than health.
The crypto proposal is structurally different. Under current German rules, gains on privately held crypto assets can generally become tax-free after a one-year holding period. Finance Minister Lars Klingbeil has proposed ending that privilege, reportedly expecting significant revenue. Crypto platforms also face new reporting duties under European transparency rules.
Calling the change a new “crypto tax” is understandable but incomplete. Short-term crypto gains are already taxable. The proposal would expand taxation to long-held gains by removing an exemption. Investors will experience that as a tax increase even if officials describe it as closing a loophole or equalizing treatment with other assets.
Supporters argue that volatile digital assets should not receive a permanent advantage unavailable to many conventional investments and that better reporting reduces evasion. Critics warn that capital and platforms can move, that retrospective application would be unfair and that Germany may lose financial-technology investment. The transition date and treatment of existing holdings will determine much of the controversy.
The “plastic tax” is different again. The European Union has required member states since 2021 to contribute to the EU budget based on non-recycled plastic packaging waste. Germany has paid that contribution from general revenue. A national charge would shift part of the cost toward producers or products associated with plastic waste.
Industry groups argue that a national plastic levy would create bureaucracy, raise consumer prices and duplicate packaging rules that already require recycling and producer responsibility. Environmental advocates say taxpayers should not subsidize waste and that price signals can encourage reusable or recyclable design. The exact base—virgin plastic, non-recycled waste, packaging or company contributions—matters enormously.
These proposals sit beside a broader coalition package that includes income-tax relief for many lower and middle earners and a higher top rate for the wealthy. A government can reduce net taxes for one group while creating new targeted charges. That may be coherent redistribution, but it does not erase literal campaign language.
Merz and his defenders can argue that the coalition agreement excluded broad increases in core taxes, not every health or environmental levy, and that unforeseen budget and healthcare pressures require adjustment. Opponents can answer that voters hear “no tax increases” as a promise about what they pay, not about the legal label attached to the payment.
The word “levy” should not become a semantic escape hatch. If government compels payment and uses the revenue for public purposes, households and firms experience a cost regardless of classification. At the same time, treating every regulatory fee as identical to an income-tax rise can obscure different policy goals.
The fairest test is transparent accounting. How much will each measure raise? Who will pay after businesses pass costs through? What behavior is meant to change? Where will the revenue go? What alternatives—spending cuts, borrowing or broader taxes—were rejected?
Germany faces weak growth, high social spending and large future borrowing needs. Any government promising better services, stronger defense and lower taxes eventually encounters arithmetic. The democratic issue is not that circumstances can never change. It is whether leaders explain the change before rebranding a broken boundary.
Is this hypocrisy or adaptation? The answer may differ across the three measures. Voters should judge the enacted text, distribution and original wording—not only the coalition’s preferred nouns.
### What to watch next
Watch the final drinks-tax bill, whether artificial sweeteners and concentrates remain covered, transition rules for existing crypto holdings and the legal base of any plastic charge. Compare enacted net burdens with Merz’s precise campaign and coalition wording rather than treating drafts as law.