2023-10-23 08:36:41
Opinion VAT & price brakes
End of heating relief? The crisis is not over yet
As of: 8:36 a.m. | Reading time: 4 minutes
“From the perspective of the energy industry, this is absurd,” says Kerstin Andreae, chairwoman of the executive board of the Federal Association of the Energy and Water Industry (BDEW).
Source: dpa/ZGB/Bernd von Jutrczenka; picture alliance/empics/Yui Mok
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The reduced VAT rate for gas and heat is to be abolished early, and the energy price brakes are also at risk of ending. In the middle of the heating season, consumers are threatened with significant price increases. The Bundestag must react urgently.
What do cinema tickets, truffles and heating energy have in common? It’s simple: a reduced VAT rate of seven percent currently applies to all of them. However, this will soon change for gas and heat of all things: last week, the Federal Cabinet decided to allow the temporary reduction in the VAT rate introduced during the energy crisis to expire earlier than originally planned.
At the turn of the year and thus in the middle of the heating season, the VAT rate is expected to rise again to 19 percentage points. Gas and district heating for households would then be more than ten percent more expensive. For a family in a single-family home with gas heating, for example, gas costs would increase by around 80 to 100 euros in the first quarter of 2024.
If you heat your apartment with gas, you can expect additional costs of 50 to 70 euros. At the same time, the energy price brakes could expire at the turn of the year. This would increase costs for many households. A decision has still not been made regarding an extension of the price caps for electricity, gas and heat until the end of the heating season.
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From the perspective of the energy industry, this is absurd. After the difficult last winter, politicians should be interested in signaling stability and security in energy prices to energy customers. Nobody knows how prices on the energy markets will develop in the coming heating season.
Because even if the markets have recovered somewhat from the extreme price capriciousness of the past year: the crisis is not yet over. Russia’s horrific war of aggression against Ukraine is still raging. Gas is still in short supply on the global market.
During a cold winter with high gas consumption, wholesale prices can quickly rise again. The war in the Middle East and the suspected attack on the Balticconnector pipeline between Finland and Estonia last week are also unsettling the markets. As a result, wholesale gas prices have recently risen again. It is still too early to give the all-clear.
After the cabinet decision to expire the VAT relief, the decision now lies in the German Bundestag. The Bundestag should overturn the federal government’s decision. Instead, the temporary reduction in the VAT rate should only expire on March 31, 2024, as originally planned.
Source: Infographic WELT
The energy price brakes should also be extended until the end of March. In this way, consumers could also be protected from high prices in the coming heating season with all its imponderables. The energy industry is committed to this together with the Federal Association of Consumer Organizations.
It is also crucial for the energy industry that the federal government now quickly provides clarity for the benefit of consumers as to how the energy price relief will continue. There are clear legal requirements and deadlines for communicating price changes to customers.
In order to meet these deadlines, convert the billing systems properly and inform customers in a timely and transparent manner, it is urgently necessary that binding specifications are available very promptly.
The hectic situation surrounding the turn of the year last year must not be repeated
What must not be repeated is a difficult and hectic situation like the one at the turn of the year 2022/2023, when the energy suppliers had to implement the highly complex price caps within a very short period of time by making complex changes to the IT systems and billing procedures for over 40 million households and thousands of commercial companies had to organize.
Only thanks to the extremely high commitment of employees in the energy supply companies did the federal government’s relief measures actually reach consumers.
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Households in Germany are currently confronted with price increases in all areas of daily life due to the still high inflation. This makes it all the more important to ensure relief and stability when it comes to something as essential as energy prices.
Politicians should therefore continue all energy price relief until the end of March 2024. It is not about a permanent subsidy of energy prices or a permanent market intervention. It’s about reliability until the end of this winter.
The author Kerstin Andreae is chairwoman of the executive board of the Federal Association of Energy and Water Industries (BDEW). From 2002 to 2019 she was a member of the Bundestag for Alliance 90/The Greens.
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