The reduction largely offsets the additional tariff imposed to compensate suppliers for high prices
Germany is significantly reducing its gas tax to deal with sharp price increases and the energy crisis caused by supply problems in the country. Chancellor Olaf Scholz announced in a short personal speech to the cameras on Thursday a reduction in the VAT for natural gas from the current 19% to 7%. With this measure, consumers will be relieved more than taxed by the state tariff that will be dictated this week and that will come into effect in October to offset the price increase of that energy good due to the war in Ukraine. Scholz emphasized that he expects the supply companies to transfer this tax cut to the consumer one by one. “This is one more step to download it,” said the Social Democratic leader.
The head of the Berlin executive also announced a new package of emergency measures for the Germans in the coming weeks due to the energy crisis. The aim is to reduce the great pressure to which many citizens and companies are exposed. “The contents of that package are being discussed cautiously within the cabinet. The issue of justice is decisive for this country to remain cohesive during the crisis,” said Scholz, who reiterated the football motto “You’ll never walk alone”. new tariff for gas imposed by the federal government so that importers can pass on the price increases suffered by the energy crisis to consumers.
This rate takes into account a surcharge for private individuals and companies of 2.4 cents per kilowatt/hour of consumption. This rate is also taxed with VAT. Something the Scholz cabinet wanted to avoid so that the State did not benefit from a precarious situation. However, European legislation does not take into account the possibility of waiving this tax. The legal framework allows no exceptions, as the European Commissioner for Economy, Paolo Gentiloni, wrote to the German finance minister, the liberal Christian Lindner. Berlin has now chosen to apply the lower VAT rate of 7% that applies to basic necessities in this country to all gas consumption. The VAT in Germany is generally 19%.
The reduction will apply at the same time as the additional rate, until the end of March 2024. Half of German homes have gas heating. According to official calculations, a single person household consumes 5,000 kilowatt hours per year. The additional rate represents an increase in annual costs of EUR 121 excluding VAT. For a family of four and a consumption of 20,000 kilowatts/hour per year, the additional cost for the compensation rate is approximately EUR 484 excluding VAT.
Source: La Verdad
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