Finance Minister Lindner apparently wants to restore VAT on gas to its original level. The SPD is against it, the Greens are hesitant. It’s about billions for the budget and high bills for customers.
There are apparently differences of opinion within the government over whether VAT on gas should be increased earlier than originally planned. According to the “Frankfurter Allgemeine Zeitung” (FAZ), Finance Minister Christian Lindner brought exactly this measure into play.
Because of the suddenly extremely high prices after the Russian attack on Ukraine, the federal government gave gas and district heating tax breaks on October 1, 2022. Originally, the lower VAT rate of seven instead of 19 percent was supposed to apply until the end of March 2024. Because of the lower gas prices, Lindner wants the relief measure to expire at the turn of the year, the “FAZ” reported.
SPD: Insulated measure in the middle of the heating season
The SPD rejects these considerations. “There needs to be an overall concept for relieving the burden on companies and citizens instead of the isolated discussion about individual measures,” said the financial policy spokesman for the SPD parliamentary group, Michael Schrodi, to the Reuters news agency. “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.”
The shortening has not yet been decided. However, it should come to the table at the latest during the budget discussions in the Bundestag. The Greens have not yet had the last word on the matter either. They announced that they would take a close look at the proposal.
At the same time, they are campaigning to extend the gas and electricity price brake, which is in effect until the end of the year. “As an assurance that prices cannot continue to go through the roof,” said parliamentary group vice-president Andreas Audretsch to the dpa news agency. “Reliable and affordable energy prices are highly relevant for citizens,” he emphasized.
Ministry of Finance expects 2.1 billion euros
The tax cut was never intended to be a permanent measure, the Finance Ministry said. It could be ended early because the gas price fell faster than expected in 2022. When asked by Reuters, a spokesman pointed out that an earlier return to the higher tax rate would mathematically mean additional revenue for the public coffers of 2.1 billion euros in the coming year.
Bringing it forward by three months would mean additional spending for citizens, but it could give the traffic light government some breathing room in the debate about the 2024 federal budget. Because there are a number of additional demands in the budget discussions, but the debt brake must be adhered to.
Since the VAT revenue is shared between the federal and state governments, this could also contribute to the 16 state governments agreeing to the tax relief package decided by the cabinet. A number of prime ministers had criticized the fact that the federal government adorned itself with the so-called Growth Opportunities Act, but that states and municipalities had to cover the majority of the tax losses.
Bentele: Energy prices are big challenges
Associations assume that the return to the higher tax rate would hit many families hard, especially during the heating season. “Energy prices continue to pose major challenges, especially for people with low incomes,” warned social association president Verena Bentele. There must be help, especially for people with little money, until prices return to normal.
The energy industry also speaks out against the reduction. In addition to the enormous effort involved in billing and communication, everything else is hardly comprehensible for customers.
Union: Citizens suffer
The proposal also finds little support in the opposition. Many consumers are still stuck in contracts that are twice as expensive as before the Ukraine war, said left-wing financial politician Christian Görke. The Union MP Johannes Steiniger criticized: “Just because the traffic light fails to agree on priorities in the budget, the citizens should now be the ones to suffer.”