Reduction of VAT: Lindner rejects “fuel price brake”.

France’s government is lowering the price of gas – calls for relief in view of high energy prices are also increasing in Germany. Finance Minister Lindner rejects a reduction in VAT. The Greens advocate “energy money”.

Despite the record prices at the petrol stations, Federal Finance Minister Christian Lindner (FDP) continues to reject a temporary reduction in VAT from 19 to seven percent for diesel and petrol. “If the Union calls for a so-called fuel price brake, then they have to say what they want to cut in the budget,” Lindner told the “Tagesspiegel”. “Or they have to admit that they are willing to take on new debts.”

Lindner went on to say that the Treasury would not get rich from rising fuel prices. If a higher proportion of a household’s disposable income is used for fuel, the VAT will only be shifted, not the revenue will increase. “People then hold back with consumption elsewhere.”

Demands for comprehensive relief

Green leader Ricarda Lang called for the rapid introduction of energy money to relieve the burden on citizens. “Many people suffer very acutely from the rising prices, when heating, at the pump or in the supermarket,” Lang told the “Bild am Sonntag”. “We need energy money as soon as possible that is paid out to all citizens. This means that everyone has more money in their accounts, and people with little money benefit the most.” The immediate surcharge decided by the coalition for children affected by poverty and the planned abolition of the EEG surcharge on July 1 are not sufficient, said Lang.

Demands for comprehensive relief were also voiced from industry. The President of the Federation of German Industries (BDI), Siegfried Russwurm, told the “Bild am Sonntag”: “Politicians should reduce energy and electricity taxes as quickly as possible and support companies with electricity grid fees.”

Left Party: “Zero percent on staple foods”

The Left Party called for a drastic reduction in taxes on food and energy. In view of the good revenue development, Left Party leader Dietmar Bartsch pushed for a suspension of VAT on staple foods and a reduction in the tax rate for energy to seven percent. “It has to end with the fact that the state still earns from rising energy and food prices,” Bartsch told the editorial network Germany.

“Explosive costs for citizens bring finance minister Lindner exploding income,” continued Bartsch. “The federal government should at least give back these 20 billion euros to the citizens.” This could take the form of a reduction in VAT: “Seven percent on fuel, gas and electricity – and zero percent on staple foods.”

The federal government expects additional revenue from VAT of 20 billion euros this year compared to the previous year. This emerges from the current monthly report of the Federal Ministry of Finance, which expects a total of 270.8 billion euros from VAT for 2022. That would correspond to an increase of eight percent compared to the revenue of 250.8 billion euros in 2021.

France relies on subsidies

Meanwhile, France wants to counteract the rise in fuel prices with a discount of 15 cents per liter. The subsidy should apply from April 1 for four months and will cost the state around two billion euros, Prime Minister Jean Castex told the newspaper “Le Parisien”. The measure applies “to all fuels” and should benefit both households and companies.

Castex explained that the reduction is only applied when paying at the checkout or by bank card at the pump and is therefore not immediately visible on the prices displayed at the entrance to the gas station. He called on dealers and oil companies to make “an additional gesture” to further reduce fuel prices. These have become “the greatest concern of the French”.

The government in Paris has already taken a number of measures to contain the effects of the months-long rise in energy prices, exacerbated by the Russian invasion of Ukraine: gas prices have been frozen, increases in electricity prices have been limited to four percent, issued extraordinary energy checks, approved inflation compensation for 38 million people and increased mileage allowances.