The federal government wants to increase the VAT on gas and district heating back to the standard rate of 19 percent three months earlier than previously planned, by the end of this year. “Fortunately, the war-related price peaks on the gas markets have now subsided,” said government spokesman Wolfgang Büchner on Monday in Berlin. “We have returned to a normal level, faster than was expected in 2022.” A higher VAT would make gas and district heating noticeably more expensive for consumers.
At that time, i.e. in 2022, the VAT rate was reduced from 19 to seven percent after significant price increases as a result of the Russian attack on Ukraine. This has been in effect since October 2022 and was initially limited to the end of March 2024. Büchner said the government must decide whether this subsidy is still necessary. The draft budget for 2024 already states that this is no longer necessary and that the measure could expire at the end of 2023. The budget draft approved by the traffic light government is now in the parliamentary process. It should be finally decided in December.
The state would receive more than two billion euros additionally
The Greens were much more reserved: “This is of course part of the budget negotiations,” said co-party leader Ricarda Lang. After the next tax estimate in the fall, it will have to be checked what can be financed. “We have no interest in making fossil gas more expensive at the moment.” Many people have a problem paying their bills despite the energy price caps. “I think the price pressure is there on its own right now.”
Skeptical tones had already come from the SPD at the weekend. “There is a need for an overall concept to provide relief for companies and citizens instead of the isolated discussion about individual measures,” said the financial policy spokesman for the SPD parliamentary group, Michael Schrodi. “We as the SPD parliamentary group are critical of an early return to higher VAT for gas prices as an isolated measure in the middle of the heating season.”
According to the Ministry of Finance, the slightly earlier increase in VAT on gas would bring around 2.1 billion euros more into the state’s coffers. The money could be used to plug holes in the budget, which will amount to at least five billion euros per year for the federal government over the next few years. Because the states would also benefit from this, they could be more inclined to agree to the Growth Opportunities Act from Finance Minister and FDP leader Christian Lindner in the Federal Council. This provides tax relief for small and medium-sized companies worth around seven billion euros per year, of which states and municipalities are expected to provide the majority.