Value added tax on gas and district heating: Bundestag decides on reduction from October

Created: 09/30/2022, 11:19 am

By: Sarah Neumeyer

Breaking news from IPPEN MEDIA.

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On Friday, the Bundestag decided to reduce VAT on gas and also on district heating.

Berlin – In order to cushion the rising energy costs caused by the energy crisis, the Bundestag decided on Friday (September 30) to reduce VAT on gas and district heating.

As early as October, the tax rate will be temporarily reduced from 19 to 7 percent.

This should apply until the end of March 2024.

The measure was approved by the Bundestag with a large majority.

In addition to the coalition factions, the CDU/CSU and AfD voted on Friday, the left abstained.

The measure was originally intended as compensation for the gas levy, which is now not being introduced.

Value added tax on gas and district heating: Bundestag decides on reduction from October

Finance Minister Christian Lindner (FDP) justified the tax cut with the rising gas prices.

"The state must not profit from the fact that life is becoming more expensive for people," said Lindner.

He also defended the 200 billion euro aid package with which the federal government wants to finance price caps on electricity and gas, among other things.

He accused Russian President Vladimir Putin of wanting to shake up the economies of western countries with an “energy war” in order to weaken their social cohesion.

"Putin will fail with this intention," said the finance minister.

The traffic light coalition called on energy suppliers to pass on the full amount of the tax cut to consumers.

"Unfortunately, the state cannot guarantee that it will be passed on to consumers," admitted the financial politician of the Greens, Katharina Beck.

"And you also relieve those who consume a lot and tend to have more money than those who consume little and tend to have less money." Nevertheless, the overall package is right.

Value-added tax on gas and district heating falls: families can save 336 euros per year

According to comparison portal Verivox, prices would have to fall by 7.3 percent if they were passed on in full to consumers.

For a family with a gas consumption of 20,000 kilowatt hours, this means a saving of 366 euros per year.

The opposition Union criticized that a tripling or quadrupling of the gas price would only be a drop in the ocean.

The bottom line is that it can even happen that a household, even with the low tax rate, pays even more VAT due to the high prices than before with low prices and a higher tax rate.

About half of all apartments in Germany are heated with gas, around 14 percent of households, especially tenants in eastern Germany, use district heating.

According to the Ministry of Finance, the state will take in around 13 billion euros less by 2024 as a result of the tax cut.

Criticism of exemptions

Union parliamentary group leader Mathias Middelberg criticized that at the present time the package that Chancellor Olaf Scholz had dubbed "double boom" was "nothing more than a debt boom".

Because what the government wants to finance with it is completely unclear, there is no calculation or basis for calculation.

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In fact, there is still no concept for the planned price cap.

A commission is to develop the gas price brake in mid-October.

It is unclear, for example, whether only basic consumption is kept artificially cheap or the entire use of gas.

Critics fear that there will then no longer be any incentive to save on gas.

(sne/dpa/AFP)