In a new book-length interview, Pope Benedict – real name Joseph Ratzinger – laments that in Germany, the divorced and remarried are everywhere quietly receiving communion, and same-sex marriages are increasingly being blessed in church.
But woe betides a Catholic who unsubscribes from the "Kirchensteuer" or church tax.
He says they are treated as if they are guilty of "heresy, apostasy, schism".
The German Catholic Church has an income of more than five billion euros per annum from the tax, which is compulsory in law for all registered Catholic and Protestant church members.
This is more than five times the revenue collected by the Italian Church from twice the number of Catholics but under a voluntary system.
Church members in Germany can withdraw from the tax by resigning their membership.
But if they do, under a recent ruling by Germany's bishops, they face automatic excommunication.
This means they cannot receive the sacraments of penance, the Eucharist, confirmation or anointing of the sick, unless there is a danger of death.
In the book, Benedict condemns the German Church for having become "too worldly", reports Sandro Magister of Italy's Chiesa Espresso website.
Magister describes Benedict's words as a "sharp indictment" and reports that German Catholics who choose not to pay the tax are treated as "plague victims".
Benedict, who is from Germany, says in the book: "In Germany some people have always sought to destroy me."
He cites the "lies" mounted against him by some his countrymen when he removed the phrase "perfidious Jews" from the traditional Good Friday prayer in the Catholic liturgy.
But some of his strongest criticisms are reserved for the Church's attitude to the tax.
"Indeed I have serious doubts about the fairness of the system as it is.
"I do not mean that there should not be a church tax, but the automatic excommunication of those who do not pay, is not sustainable, I think."
Catholics are often employees of the Church and have a "trade union" mentality.
To them, the Church is little more than an employer to complain about.
Benedict says that any move away from a "dynamic of faith" represents "great danger" for the Church in Germany.
"There are so many employees under contract that the institution is turning into a social bureaucracy," he warns.
He says the surplus of money "saddens" him.
Magister comments that the Church in Germany is mostly neither poor nor merciful, but rather "stifled by his own apparatus" and, what is more, bowing down to the world on crucial issues of morality and dogma.
In an earlier interview Archbishop Georg Gänswein, personal secretary of Benedict, also condemned the German church's attitude to the tax. He said the automatic excommunication was "excessive, incomprehensible".
A person may question the dogmas and not get kicked out. It appeared that the non-payment of the tax was a "more serious infringement" than transgressing against the truths of the faith.
The German Bishops' Conference has so far declined to comment on the former Pope's criticisms.