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Allocation up, taxes down: Traffic lights want to turn on the gas price

2022-08-18T15:06:30.100Z


Allocation up, taxes down: Traffic lights want to turn on the gas price Created: 08/18/2022, 16:52 Value-added tax on gas is to be reduced from 19 to 7 percent for a limited period of time. © Klaus-Dietmar Gabbert/dpa The federal government is sharing the burden of rising energy costs back and forth. The latest adjustment screw: VAT. But who does that help in the end? The most important questio


Allocation up, taxes down: Traffic lights want to turn on the gas price

Created: 08/18/2022, 16:52

Value-added tax on gas is to be reduced from 19 to 7 percent for a limited period of time.

© Klaus-Dietmar Gabbert/dpa

The federal government is sharing the burden of rising energy costs back and forth.

The latest adjustment screw: VAT.

But who does that help in the end?

The most important questions and answers.

Berlin - The gas surcharge is intended to keep energy importers alive - gas consumers pay for it.

The surcharge of 2.4 cents per kilowatt hour is intended to compensate for the increased procurement costs of importers in order to protect them from bankruptcy and the energy system from collapsing.

The federal government would like to forego the tax revenue from the levy - but is not allowed to do so for reasons of European law.

Instead, Chancellor Olaf Scholz (SPD) announced a far-reaching step on Thursday.

What exactly is Scholz planning?

Because of the high energy prices, VAT on all gas consumption - not just the surcharge - is to be reduced from 19 to 7 percent for a while.

According to Scholz, this should apply as long as the gas levy is levied, i.e. until the end of March 2024. The 7 percent is the usual reduced VAT rate that applies to basic service goods, such as bread, butter or potatoes, but also to books and theater tickets .

What does this mean for consumers' gas bills?

How much they save depends on a number of factors, including gas consumption and the price at which you contracted with the supplier.

Nevertheless, Scholz promised in general: "With this step, we relieve the gas customers significantly more than the additional burden caused by the surcharges."

However, comparison portals came to a different conclusion: According to Check24 and Verivox, you pay more for the gas levy than you save with the current gas price through the tax reduction: "The reduction in VAT does not offset the costs of the gas procurement levy."

Is it certain that the relief will reach the citizens?

No, because suppliers are not obliged to pass on the tax reduction to their customers.

Scholz emphasized: "We expect companies to pass this reduction on to consumers one-to-one." Economics Minister Robert Habeck (Greens) made a similar statement.

The FDP called on Habeck to hold the energy suppliers accountable.

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From the point of view of the President of the Munich Ifo Institute, Clemens Fuest, it is unclear whether the sales tax reduction will be passed on to the end consumer or whether the bottom line is that prices will rise.

"As a result, one can probably assume that the companies will also benefit proportionately from the sales tax reduction," said Fuest.

Why load first and then unload again?

"It is contradictory to first increase gas prices by means of a levy and then to reduce them again by reducing sales tax," said Ifo President Fuest.

His colleague from the German Institute for Economic Research (DIW), Marcel Fratzscher, raised the same question.

"The federal government states that the financial relief from the lower VAT compensates for the higher costs from the gas surcharge," he wrote on Twitter.

"Question: why doesn't the federal government pay the gas levy itself and save a lot of additional bureaucracy and uncertainty?"

Does that set the right incentives?

On the one hand, citizens should save energy and especially gas, on the other hand, the federal government now wants to lower the gas price - which sends the opposite signal.

"VAT should be levied in full in order to maximize the ecological steering effect of the gas surcharge and to make us less dependent on Russian gas," said the energy expert at the RWI-Leibniz Institute, Manuel Frondel, of the "Rheinische Post".

Who benefits the most?

High earners, say economists.

"Since every kilowatt hour of gas consumed becomes cheaper with the VAT, those who also consume more gas are relieved - calculated in euros.

These are mainly households with higher and high incomes, ”said the scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, which is close to the trade union, Sebastian Dullien.

In his view, a price cap for basic gas consumption would have been better, above which gas consumption would be more expensive - which in turn would provide an incentive to save.

DIW President Fratzscher speaks of "aid based on the watering can principle, from which people with high incomes receive the majority of the aid".

How much does the tax cut cost the state?

The Ministry of Finance expects costs of almost five billion euros for the winter half-year from October 2022 to the end of March 2023.

It was said that one could not look further ahead because gas prices and consumption were too volatile.

Has the tax cut already been decided?

Paragraph 12 of the Sales Tax Act regulates which goods are subject to the reduced VAT rate.

In order to change this, resolutions by the Bundestag and Bundesrat are necessary.

The states have a say because part of the VAT revenue goes to them.

Is that the only relief or are there more to come?

Scholz speaks of a further step towards relief.

But there is more to come.

"In the next few weeks we will put together a third relief package in order to alleviate the great pressure that is weighing on many citizens, but also on companies," he promises.

What that looks like will be discussed "with confidence in the government".

Scholz emphasizes that it must be fair.

Most recently, he also said that he wanted to relieve the burden on people who run the risk of soon not being able to pay their bills.

dpa

Source: merkur

All news articles on 2022-08-18

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