In Times of crisis can be followed one after the other by terror and relief, burdens and relief. That was the case on Thursday, when higher surcharges for natural gas customers were announced in Germany, followed shortly afterwards by a reduction in VAT.
Chancellor Olaf Scholz (SPD) announced in Berlin that he would reduce the tax on gas consumption from 19 to 7 percent by March 31 next year. This period includes the term of the new gas procurement levy, which is used to finance a large part of the additional costs for expensive replacement purchases instead of Russian supplies. This surcharge costs the end consumer 2.42 cents per kilowatt hour (kWh) and is subject to value added tax or sales tax, like all components of the energy price, under current European law. The European Commission announced that the tax cut was compatible with the underlying directive
Scholz said the reduction was made because “gas customers should not incur any additional burdens from the mandatory levying of value added tax on gas surcharges”. However, he also referred to other charges that the market area manager for gas, Trading Hub Europe (THE), announced on Thursday. The Chancellor promised that the tax relief would be greater than the additional burden of the surcharges: “We expect companies to pass on this reduction one-to-one.” Scholz repeated his solidarity motto “You’ll never walk alone”. He announced a third relief package for the “next few weeks” “to alleviate the great pressure on citizens”.
According to THE, a new gas storage levy of 0.059 cents per kWh is due in the same period of time as the procurement levy. THE uses this money to fill unused storage quotas for autumn and winter. On October 1st, the allocations that have existed for a long time will also be redefined in the working price. The balancing charge for private households increases from 0 to 0.57 cents and for industrial customers from 0 to 0.39 cents. In this way, the suppliers ensure that the regional gas network, the balancing group, remains stable. The surcharge covers the shortfall between the use of the so-called control energy and the balancing energy. The new height is necessary because of the “overall difficult market environment”, according to THE.
The conversion fee in the gas price is still 0.045 cents, while the conversion levy increases from 0 to 0.038 cents per kWh. Both items have to do with costs arising from the switch from gas with a lower calorific value to gas with a higher calorific value. By 2030, the entire network is to be converted, which will require work on lines and in four million homes and businesses. The VHP surcharge for the virtual trading points between the balancing groups will also be increased slightly. This is the remuneration that THE collects from the suppliers and which they pass on.
The energy industry promised, as requested by Scholz, to pass on the tax reduction. “Of course, the energy suppliers will pass on the tax relief to their customers,” says the head of the energy association BDEW, Kerstin Andreae. The reduction could “dampen the massive price increase”. According to Andreae, the government should also go to 7 percent for electricity. Economics Minister Robert Habeck (Greens) pointed out that in addition to private households, the economy was also suffering from the “energy crisis”. That is why businesses need support. He announced the extension of aid programs.
The industry was skeptical. “Companies do not pay VAT, so the relief does not bring them anything,” said Wolfgang Große Entrup, Managing Director of the Chemical Association VCI. The industry has to shoulder another hundred million euros a year. So that she doesn’t get on her knees, “relief becomes more urgent every day”.
Economists condemn the tax cut. The Mannheim economist Hans Peter Grüner emphasized how important uniform European VAT rates are for ensuring that gas is used efficiently, i.e. where it is needed most urgently. “It’s no small thing if Germany now wants to overturn this on a case-by-case basis,” he wrote on Twitter. Economics Veronika Grimm described the reduction as a drop in the bucket. Nobody should now believe that gas won’t be so expensive after all. According to Grimm, there is still a need for targeted relief right into the middle of society. The economist Rüdiger Bachmann, who researches in America, said he no longer understood the world. “The FDP wants to be the party of the market economy and is constantly intervening counterproductively in the price mechanism,” he wrote, referring to a contribution by FDP politician Konstantin Kuhle, who had advocated the reduction.
It is unclear whether Scholz’s promise of relief will actually come true. The comparison portal Check24 puts the previous costs for a model household with 20,000 kWh at 19 percent tax at 3717 euros per year. At 7 percent it is only 3342 euros, ie 375 less. In addition, there are the tax-reduced accounting, procurement and storage allocations of 653 euros. Together, that’s 3995 euros, 278 more than before. The consultants from ECG Energie Consulting have programmed a calculator for commercial customers to show the burden of the levies. As a result, an additional 3,086 euros are incurred for every 100,000 kWh, 2,419 euros for the procurement fee alone.