An extremism clause for fiscal equalisation

Bavarian Minister-President Markus Söder (CSU) wants the other donor states to push through an extremism clause in the Länderfinanzausgleich, the system that equalises finances between the German states. In an interview with the Augsburger Allgemeine, published on Thursday, 22 October, he said Bavaria was talking with Hesse and Baden-Württemberg about the idea. The donor states at present are Bavaria, Baden-Württemberg, Hesse and Hamburg. Under the proposal, states governed by extremists would receive no support from the donor states, and Söder named Saxony-Anhalt and Berlin as the states that would be hit if their government formations proceed as expected.

“We are in talks with Hesse and Baden-Württemberg about an extremism clause for the fiscal equalisation between the states.”

Saxony-Anhalt, Berlin and the AfD and Linke

The proposal marks a shift in Söder's position. After the AfD won the Saxony-Anhalt election, he called it absurd to cut that state's equalisation funds as a punishment, arguing the system must change in general but cannot be used to punish a state. The state office for the protection of the constitution in Saxony-Anhalt classifies the AfD there as confirmed right-wing extremist. No Linke state association is currently rated extremist, although some structures of the party are under observation in some states. In Berlin the Linke clearly won the House of Representatives election on 20 September, and Söder has put the capital treaty (Hauptstadtvertrag) up for discussion should the party lead the Senate while keeping its plans to socialise large housing companies.

Coalition talks in Berlin

On Saturday, 17 October, the Linke, Greens and SPD in Berlin announced a joint exploratory paper and the start of coalition talks. The SPD state executive and a Greens party conference endorsed the approach on Monday evening, 19 October. The Linke party conference will decide on 31 October whether the party formally enters coalition talks. Antisemitism accusations against individual Linke members overshadow the process, and senior Union politicians sharply criticise the socialisation plans of the possible partners. At the CSU parliamentary group's autumn retreat at Kloster Banz, Söder argued that 'extremist politics, anti-democratic politics and above all antisemitic politics' must not be rewarded. He warned that the emerging Berlin government threatens serious damage to Germany's international standing.

“I will not stand idly by and watch this.”

Constitutional limits and reactions

Article 107 of the Basic Law ties equalisation to the financial strength of the states rather than to the make-up of their governments, which the proposal runs against. Article 143f sets out a special procedure for reordering financial relations after 31 December 2030. Gordon Schnieder (CDU), chair of the Minister-Presidents' Conference, opposes the clause. Söder said the other recipient states need not worry and could agree to the change. Bavaria itself was a recipient from 1950 to 1986 and is now the largest payer, contributing about 60 percent of the volume by its own account.

“Such a clause would not change anything about the payments to the other recipient states for now.”