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Energy price crisis: Economists are urging the federal government to relieve the middle class

2022-08-17T05:34:59.925Z


Gas surcharge yes, but no VAT on it - this project of the federal government fails because the EU says no. So how does the coalition intend to relieve the burden on citizens?


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Natural gas storage facility in Rehden, Lower Saxony: The gas bought on the world market is expensive

Photo: Sina Schuldt / dpa

From the point of view of economists, the federal government urgently needs to launch a relief package, especially for people with low to middle incomes.

In view of the sharp rise in energy prices, the President of the German Institute for Economic Research, Marcel Fratzscher, said: "The best instrument are direct transfer payments such as an energy money of 100 euros per person and per month for the next 18 months."

Sebastian Dullien, scientific director of the Institute for Macroeconomics and Business Cycle Research of the Hans Böckler Foundation, said that it would be conceivable and sensible to relaunch the energy flat rate, which will be paid to all employees in September.

Households that have largely been left empty-handed so far, such as pensioners with low incomes but without housing benefit, should also be taken into account.

A state gas levy will apply from October, which will lead to significant price increases.

It is intended to benefit gas suppliers who have to buy replacements for the lack of cheaper gas volumes from Russia at high prices.

In addition, higher procurement costs are gradually reaching customers anyway.

Value added tax on the gas surcharge down to five percent?

One of the new plans was to exempt the gas levy from VAT.

However, the European Union rejected a corresponding proposal by Finance Minister Christian Lindner (FDP).

After the cancellation, traffic light politicians are now considering a reduction.

"The minimum of five percent should be used," said Green economic politician Dieter Janecek to the "Handelsblatt".

Similar voices came from the SPD.

“Now the tax has to be reduced to at least five percent.

We have to do everything we can to keep the levy as low as possible," said SPD economic politician Falko Mohrs.

Union faction Vice Jens Spahn (CDU) meanwhile brought the reduction of the energy tax on gas into play in the "Handelsblatt".

"Such exceptions are explicitly provided for in the EU energy tax directive."

Chancellor Olaf Scholz has assured the citizens that no one will be left alone.

For example, the SPD politician has announced a reform with a strong increase in housing benefits at the beginning of next year.

Scholz said last week that the government also wanted to do something for those who have an income from work but also have to do math, who have no savings and cannot easily deal with the increased energy costs.

"That applies to a lot of citizens," said Scholz.

"I'm concerned with those who earn 2,800, 3,200 or 4,000 euros gross per month, for whom all of these are major challenges." It's about an overall package.

Fratzscher said the group named by the Chancellor includes more than one in five people in Germany.

»These are mainly people in the low-wage sector, which is unusually large in Germany, and also numerous pensioners.« This group has hardly any savings to cover additional costs, and they receive hardly any direct support from the state.

Increase in energy prices hits the middle of society

Therefore, these people could not cover the costs of higher inflation on their own and urgently needed support from the state.

“We already have severe social imbalances in this group as well.

This can be seen, for example, in the increase in the number of people who are over-indebted,” says Fratzscher.

"Politicians must now urgently implement a third relief package, which will give top priority to relieving this group." Fratzscher said that energy money of 100 euros per person per month for the next 18 months should only go to people with medium and low incomes and not to people with high incomes.

Dullien said the income groups Scholz named correspond to the lower middle class in Germany.

"In 2021, for example, the average gross earnings of a full-time employee was just over 4,000 euros per month." So Scholz wants to relieve the burden on the middle of society.

"That's right.

The rise in energy prices is hitting middle-class people hard.« Because of the rising gas costs, heating bills would skyrocket.

»People who used to pay 100 euros a month for their gas heating will soon be paying 300 euros or more.

For families who have 2,000 to 3,000 euros net per month, this is a massive burden that can lead to payment defaults and social upheaval," says Dullien.

"It is important for social peace in the country to cushion this burden."

This group cannot be relieved via the normal transfer systems.

A new energy lump sum could be paid out in December to help people settle their bills after the winter.

"Another good option would be to introduce a gas price cap for basic consumption per household," says Dullien.

Read here: »How the state could relieve gas customers – four suggestions under review«

The energy flat rate of 300 euros decided by the federal government should come in September.

The money is paid out with the salary, so you also pay taxes on it.

Social associations hope to clarify the promised relief before the start of the gas levy.

'The traffic light government hasn't got time to argue much longer.

We need a solution by September," said VdK President Verena Bentele of the "Rhein-Neckar-Zeitung".

The Vice President of the Social Association Germany (SoVD), Ursula Engelen-Kefer, told the "Neue Osnabrücker Zeitung": "We cannot burden the vast majority of society with more and more burdens and at the same time leave them in the dark about how they will be supported." If there is no social unrest in the fall, it is "of crucial importance that the federal government quickly decides on relief that reaches the people directly".

apr/dpa

Source: spiegel

All business articles on 2022-08-17

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