Due to the rapid rise in gas prices, the federal government wants to reduce VAT on natural gas for a limited period of time. The tax rate on gas consumption should fall from 19 percent to 7 percent, Chancellor Olaf Scholz announced on Thursday. “With this step, we are relieving gas customers significantly more than the additional burden caused by the surcharges,” said the SPD politician.
The reduced VAT rate should apply as long as the state gas levy is levied, i.e. until the end of March 2024. According to the Ministry of Finance, it can take effect as soon as the Bundestag and Bundesrat have agreed.
According to the Ministry of Finance, the tax cut will cost the state almost five billion euros in the winter half-year up to March 31, 2023. It was said that one could not look further ahead because gas prices and consumption were too volatile.
Scholz emphasized that he expects companies to pass the tax cut on to consumers one-to-one. “We will also communicate that very clearly,” he promised. Economics Minister Robert Habeck (Greens) made a similar statement.
The background is the gas surcharge, which importers can use from October to pass on increased procurement costs to consumers due to the Ukraine war. All gas users will then have to pay, whether private individuals or companies – initially around 2.4 cents per kilowatt hour. Value added tax is also charged on the fee.
The federal government actually wanted to prevent this and thus ensure that the state did not earn money. According to European law, however, there is no provision for waiving VAT. EU Economic Commissioner Paolo Gentiloni wrote Finance Minister Christian Lindner that the federal government has the option of reducing VAT to the EU minimum rate of 5 percent.
The traffic light coalition does not choose this step. Instead, she wants to use the reduced tax rate of 7 percent. In Germany, a VAT rate of 19 percent usually applies. However, 7 percent apply to selected goods.
Habeck emphasized: “It was always clear: we don’t want people to be additionally burdened with VAT on the gas levies. Since a direct tax exemption is not possible under European law, a temporary reduction in VAT on gas is logical.”
Lindner emphasized that the federal government’s tax cut goes well beyond compensating for the gas levy. The reduced tax rate ensures “that the state does not profit from the high gas prices,” he told the “Rheinische Post”.
However, it is disputed whether the tax cut actually compensates for the additional burden caused by the gas surcharge. According to the comparison portals Verivox and Check24, the gas surcharge is even higher given the current gas price. The scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, Sebastian Dullien, expects that only two thirds of the gas levy will be absorbed.
About half of all households in the Federal Republic heat with gas. According to example calculations, the surcharge for a one-person household with an annual consumption of 5000 kilowatt hours means annual additional costs of around 121 euros, even without VAT. For a family household with an annual consumption of 20,000 kilowatt hours, the additional costs without VAT are around 484 euros per year.
“Economics” Veronika Grimm considers the tax cut to be the wrong move. “Compared to the price increases to be expected then, that’s a drop in the bucket,” she told the “Handelsblatt”. In addition, relief to the middle of society is necessary. “Only now there is a lack of income from VAT that could contribute to the financing.” Scholz announced another relief package that the federal government would discuss in the coming weeks. (dpa)