Germany's embattled Social Democratic Party (SPD) eyes tax cuts in 2025 election manifesto

The Social Democratic Party (SPD) of German Chancellor Olaf Scholz plans to lower taxes for a majority of the population if reelected in next year's federal elections, according to a draft resolution to be adopted on Sunday.

In return, the top 1% of incomes are to be taxed more heavily.

"This reform will give people more financial leeway and strengthen purchasing power. We are thereby stimulating the economy from the bottom up and from the middle of society," says the draft prepared for Sunday's SPD executive committee meeting, seen by dpa.

The German economy - Europe's largest - is struggling to cope with the fallout of the Ukraine war, trade tensions with China and high energy costs, while burdened by red tape and creaking infrastructure. Revised government predictions forecast a recession for 2024.

Scholz's two-day gathering with the entire party leadership is aimed at laying the groundwork for the party's 2025 election campaign. The SPD is performing poorly however, and few expect Scholz to remain in office following next year's federal elections.

The six-page draft resolution, titled "We are fighting for Germany's future: Stimulating the economy, securing jobs, relieving employees," also promotes a minimum wage of €15 ($17.5), measures to promote the sale of electric vehicles and a reform of the debt rules.

The party does not intend to lower corporate taxes as a means of promoting investments in Germany. However, it would offer large tax deductions and incentives for firms that invest in future-oriented industries and provide good jobs in Germany, the draft says.

The document lashes out at the conservative Christian Democrats' (CDU) economic policy under party leader Friedrich Merz, who is widely tipped to succeed Scholz next year.

"Those who insult employees in Germany as lazy and deny them good wages and secure pensions have lost respect for the true achievers who keep our country running with their hard work every day," the paper says.

This includes the millions of people whose families migrated to Germany, "who have to experience being called a 'problem' by the CDU and [sister party] CSU every day."

Nationwide surveys put the SPD far behind the CDU, polling at around 16-17%, on a par with - or even slightly behind - the far-right Alternative for Germany (AfD).