High energy costs: Criticism of VAT reduction on gas

Status: 08/19/2022 06:42 a.m

Social associations, the trade union ver.di and the industry have criticized the planned reduction in VAT on natural gas. The municipalities, on the other hand, praised the measure.

Social organizations and the service union ver.di have reacted critically to the reduction in VAT on gas from 19 to 7 percent. “The VAT reduction relieves everyone, including those who don’t need it at all,” the joint association explained to the Düsseldorf “Rheinische Post”. “This also includes top earners who could relieve our social systems with VAT.”

Instead, the association spoke out in favor of “specific help for those who can no longer pay their gas bill”.

Social Association: Tax cut must arrive

The president of the social association VdK, Verena Bentele, told the “Rheinische Post” that the tax cut had to reach the people. “This time it must not be the same as with the tank discount. The tax cut must reach the people.”

To ensure this, a “legally effective regulation” is necessary, Bentele said. “Because changing the gas supplier is more complicated than driving to the nearest gas station.”

Ver.di calls for a gas price cap

Ver.di boss Frank Werneke told the newspapers of the Funke media group that he did not consider the temporary reduction in VAT on natural gas to be sufficient. “It is also necessary to implement the gas price cap we are demanding for normal consumption; for a family of four, for example, this is 12,000 kilowatt hours per year.”

The Ver.di boss suggested that the costs would have to be capped at the 2021 level and compensated for by the energy suppliers. The government’s announcement that it would reduce the value-added tax for gas from 19 to 7 percent was “a step in the right direction.”

Chancellor Olaf Scholz had announced the temporary reduction in VAT on gas on Thursday. This should relieve people more than they are burdened by the gas surcharge.

Industry: VAT reduction on gas sends the wrong signal

The Federation of German Industries also described the VAT reduction as sending the wrong signal. “Saving gas remains important. The relief from the announced lower value added tax goes unnoticed by the companies because companies do not pay any value added tax,” said Holger Loesch, deputy general manager of the BDI, the German press agency.

According to Loesch, the gas levy burdens companies with costs of up to 30,000 euros per employee. “Companies are already struggling with escalating energy costs. Politicians must now consistently maintain the competitiveness of industry and relieve companies in need of protection.”

Loesch demanded that the federal government should lower the amount of the gas levy and extend the duration of the survey. The BDI is also demanding that the electricity tax be reduced to the European minimum, that grid fees for all consumers be co-financed by the state and that previous energy tax relief such as peak balancing be continued.

Lower VAT on gas relieves local authorities

The municipalities in Germany, on the other hand, expect considerable financial savings from the reduction in VAT on gas consumption. “The reduction in the VAT rate on gas from 19 to seven percent is an important signal and represents a noticeable relief for citizens, the economy and, last but not least, for the municipalities themselves,” says the general manager of the German Association of Towns and Municipalities, Gerd Landsberg, according to the “Funke Mediengruppe”.

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