Newspaper: Rhein Calls for Reform of State Financial Equalization - Hesse’s leader demands radical reform of Germany’s fiscal equalisation system
Boris Rhein, Hesse’s Minister-President, has called for a major overhaul of Germany’s fiscal equalisation system. He argues that donor states like Hesse should no longer fund recipient regions without conditions. His proposal centres on a new principle: financial aid must encourage self-reliance rather than dependency.
Rhein, a member of the CDU, has criticised the current system for decades of imbalance. Hesse has paid over €75 billion into the scheme since its creation but has never received a single transfer. The state’s leader now insists that recipient regions must prove efforts to strengthen their own finances before receiving support.
His frustration stems from what he sees as unfair financial burdens. Rhein claims that while Hesse maintains strict budget discipline, recipient states use the funds to offer benefits their citizens enjoy—benefits that Hesse’s taxpayers cannot access due to fiscal restraints. The Minister-President also opposes the idea of Hesse taking on debt to sustain the equalisation system. Instead, he demands a shift away from what he calls 'election-year handouts'. His proposed reform would tie financial assistance to measurable improvements in how recipient states manage their budgets.
Rhein’s push for reform highlights long-standing tensions in Germany’s financial equalisation system. If adopted, his plan would require recipient states to demonstrate greater fiscal responsibility. The outcome could reshape how funds are distributed between Germany’s federal regions.
