After nerve-wracking budget negotiations, the traffic light coalition has pulled itself together. She is cutting and saving in countless places in the budget for 2024. This also creates burdens for some.
For many citizens and companies, the traffic light decisions just before Christmas are not a nice gift: after the Federal Constitutional Court’s budget ruling, the coalition had to scrape together billions to plug holes. There are no major cuts, especially in the social budget. At the same time, however, there will probably be noticeable burdens when it comes to refueling and electricity, among other things.
The coalition partners had to raise 17 billion euros in the core budget for the coming year alone, and another 12 billion in the special fund for investments in climate protection and a modern economy. Funding programs are also being targeted here, as spending of 45 billion will be canceled by 2027. The traffic light did not provide an exact list of deletions, but a few things did come through.
The opposition Union spoke of “massive tax increases at the expense of citizens and the economy”. The Ministry of Finance, on the other hand, points out that from the beginning of the year, citizens would be relieved of 15 billion euros through income tax. The reduction in subsidies also serves the goal of reducing electricity taxes for the manufacturing industry. What the agreement means for consumers:
Refueling and heating are becoming more expensive
The CO2 price for refueling and heating with fossil fuels is to be increased. Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) said they were returning to the old price path of the grand coalition.
This means that the CO2 price will not rise to 40 euros per ton on January 1, 2024 as previously planned – but to 45 euros. It is currently 30 euros. The coalition had postponed an increase in the CO2 price from the beginning of 2023 due to the energy crisis – and thus deviated from the price path of the previous government made up of the Union and SPD.
In 2025 the CO2 price is expected to rise to 55 euros. The income from this flows into the climate and transformation fund, from which projects for climate protection, among other things, are financed. The Federal Constitutional Court cut 60 billion euros from this fund in mid-November. The higher price means there is now additional income.
According to the ADAC, users of gasoline cars have to expect additional costs of 1.4 cents per liter due to the faster increase. Overall, the liter of gasoline will be around 4.3 cents more expensive at the turn of the year. Diesel drivers would have to expect an additional 1.6 cents compared to the original plans, meaning that a liter of diesel would be around 4.7 cents more expensive.
According to calculations by the comparison portal Verivox, gas becomes more expensive by 0.39 cents per kilowatt hour, heating oil by 4.8 cents per liter. A model family with a heating requirement of 20,000 kilowatt hours would therefore have additional annual costs of 78 euros for gas and 96 euros for oil heating.
Electricity prices are rising
Consumers and companies also have to prepare for higher electricity prices. The reason: A planned 5.5 billion federal subsidy for the fees for the electricity network is being canceled. The network fees for the electricity highways are part of the electricity price. As the transmission system operators announced, the network fees for 2024 will now double to an average of 6.43 cents per kilowatt hour.
The company 50Hertz, an operator of the electricity highways, estimates that this means additional costs of around 60 euros for a household customer with an average consumption of 3,500 kilowatt hours per year. The German Chamber of Commerce and Industry criticized that the economy across the board was also threatened with significantly rising electricity prices at the turn of the year. However, there are significantly reduced network fees, especially for large industrial companies.
The coalition is also sticking to the planned reduction in electricity tax for the manufacturing sector. As a result of the ruling, the state gas and electricity price brakes will expire at the end of the year and not at the end of March as originally planned.
Funding for electric cars ends earlier
There have already been cuts in government support for electric cars, and more are planned. According to Habeck, the coalition wants to end the environmental bonus earlier than previously planned. The end of the purchase bonuses for electric cars was actually planned for 2025. It initially remained unclear when this would end. However, this should not affect applications that have already been submitted.
Plastic products could become expensive
Products made from plastic could also become more expensive, because in the future manufacturers will have to pay a plastic tax to the EU itself, which has so far been transferred from tax revenue. It’s about 1.4 billion euros. Manufacturers could pass on the additional costs to end consumers.
The Ministry of Finance emphasizes that this is actually a relief for taxpayers – because they no longer have to finance the levy themselves through their taxes.
Domestic German flights could become more expensive
Many environmental associations have long viewed the current tax exemption for kerosene as a climate-damaging subsidy. From circles in the Ministry of Economic Affairs and Climate Protection it was now said: “Among other things, we will tax kerosene in national air traffic in the future.” This strengthens climate protection. According to reports, this would only be possible for flights within Germany – and it could have an impact on flight prices. The final word on this does not seem to have been spoken in the coalition yet.
The Federal Association of the German Aviation Industry criticized: “Germany is already clearly lagging behind almost all other European and non-European countries in the revival of air traffic since the pandemic.” In this situation, making feeder traffic to German hubs more expensive by going it alone nationally is not a good idea. It shifts traffic to European and international countries.
Tax breaks for farmers should be eliminated
The traffic light also wants to shorten tax breaks for farmers and foresters. Such companies can currently request a refund of part of the energy tax paid for their fuel consumption. In addition, agricultural and forestry vehicles are exempt from vehicle tax.
Agriculture Minister Cem Özdemir expressed concerns about possible far-reaching savings. The Green politician said he had always warned against placing a disproportionate burden on agriculture. “If both agricultural diesel subsidies and vehicle tax exemptions are canceled, this will be the case. I think that is problematic.” This would be a competitive disadvantage compared to other countries that offer comparable subsidies.
What is not being shaken
During the negotiations, many feared cuts in the social sector. But these are now largely missing. Basic child welfare is scheduled to start in 2025 as planned. Citizens’ allowance will also be increased at the turn of the year as planned. However, according to reports, a bonus will be deleted here. It’s about 75 euros a month for those who take part in measures that particularly help them find their way back to work in the long term.
Some subsidies classified as harmful to the climate by environmental associations also remain in place. These include, for example, the tax advantage for diesel fuel and the company car allowance, which critics believe promotes the sale of large combustion cars and benefits upper income groups. The commuter allowance will not be affected either.
The coalition is also no longer touching the basic principles of its laboriously negotiated compromise on the heating law – but a so-called speed bonus when installing new climate-friendly heating is not expected to be quite as high as planned. Despite the budget crisis, the traffic light is also holding on to billions in subsidies for industrial projects in East Germany, including the chip factories of Intel near Magdeburg and TSMC near Dresden.