Germany launches major reforms with 34-point plan targeting pensions, taxes, and workforce

Golden Ten Data reported on July 2 that German Chancellor Merz on Thursday unveiled a package of pension, tax, and labor reforms. He stated that these measures will promote growth, employment, and competitiveness while maintaining social welfare protections. Merz said the government's goal is to have parliament pass the main elements of the 34-point package by the end of the year. The package includes: ① Pensions: Implementation of the Pension Committee's recommendations, introducing additional capital market-based elements into the national pension system, and gradually raising the retirement age over the coming decades. ② Family tax relief: By increasing the tax-free allowance and reducing the progressive tax rate burden on middle-income groups, working families with two children will receive more than €600 (about $685) in income tax relief. These measures are expected to reduce the tax burden by about €10 billion per year. Part of the funding for these measures comes from raising the top tax rate for those with annual taxable income over €280,000 from 45% to 47%. ③ Industry and technology: Measures to support key sectors including automotive, chemicals and pharmaceuticals, clean technology, machinery, batteries, semiconductors, and artificial intelligence. The "Germany Fund" investment framework will be expanded to serve as a strategic investment tool focusing on resilience, energy, and raw materials.