Gas VAT is to fall – criticism from Verdi and industry

Gas VAT is to fall – criticism from Verdi and industry

Federal Chancellor Olaf Scholz announced on Thursday the temporary reduction in VAT on gas. Social associations, the Verdi union and industry consider the measure to be of little use.

The Federation of German Industries has described the reduction in VAT on natural gas announced by the federal government as giving the wrong signal. “Saving gas remains important. The relief from the announced lower value-added tax goes unnoticed by the companies, because companies do not pay any value-added tax,” said Holger Loesch, deputy general manager of the BDI, the German Press Agency in Berlin. According to Loesch, the gas levy burdens companies with costs of up to 30,000 euros per employee. “Companies are already struggling with escalating energy costs. Politicians must now consistently maintain the competitiveness of industry and relieve companies in need of protection.”

According to social associations, the reduction in VAT is not a targeted help

Social organizations and the Verdi services union have also reacted critically to the reduction in VAT. “The VAT reduction relieves everyone, including those who don’t need it at all,” the joint association said to the Düsseldorf “Rheinische Post” on Friday. “This also includes top earners who could relieve our social systems with VAT.”

Because of the rapid increase in gas prices, the federal government wants to reduce VAT on natural gas for a limited period of time. This was announced by Chancellor Olaf Scholz (SPD) on Thursday. This should relieve people more than they are burdened by the gas surcharge. The reduced VAT rate of 7 percent should apply as long as the state gas levy is levied, i.e. until the end of March 2024.

Additional costs are distributed to end users

The gas surcharge is intended to distribute increased costs for gas importers to end customers. Gas importers are currently being forced to buy expensive alternatives to meet their contracts because of curtailed Russian supplies. In order to avoid imbalances and ultimately ensure security of supply, they can pass on 90 percent of the resulting additional costs from October – these are distributed to all end customers via the gas levy.

Loesch demanded that the federal government should reduce the amount of the surcharge and extend the duration of the survey. The BDI is also demanding that the electricity tax be reduced to the European minimum, that grid fees for all consumers be co-financed by the state and that previous energy tax relief such as peak balancing be continued.

Verdi calls for a gas price cap

Instead, the social organizations advocate “specific help for those who can no longer pay their gas bill”. The president of the social association VdK, Verena Bentele, told the “Rheinische Post” that the tax cut had to reach people. “This time it must not be the same as with the tank discount. The tax cut must reach the people.” To ensure this, a “legally effective regulation” is necessary, Bentele said. “Because changing the gas supplier is more complicated than driving to the nearest gas station.”

Verdi boss Frank Werneke meanwhile told the newspapers of the Funke media group that he did not consider the temporary reduction in VAT on natural gas to be sufficient. “It is also necessary to implement the gas price cap we are demanding for normal consumption; for a family of four, for example, this is 12,000 kilowatt hours per year.” The Verdi boss suggested that the costs would have to be capped at the 2021 level and compensated for by the energy suppliers. Lowering the VAT is still “a step in the right direction”.

Source: Stern

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