Germany considers VAT waiver for gas surcharge - Minister
3 Min Read
German Finance Minister Christian Lindner says he is considering the exemption of the country's looming gas levy from sales tax.
-
A growing number of enterprises in Germany are forced to stop or reduce production due to increased gas prices.
German Finance Minister Christian said on Friday that Germany wants to impose on households a gas levy to bail out its struggling suppliers; however, an extra tax on that surcharge would be a bit too far.
"As federal finance minister, I would not want to tax the gas contribution," Lindner told the local news agency dpa.
Read: Germany raises alert level over securing gas supplies
A shortage in Russian gas exports to Germany has raised prices for local suppliers. The German government wishes to divide this burden between suppliers and consumers, who would be charged a levy of up to 0.05 euros ($0.05) per kWh from October 1 to April 1, 2024. This is equivalent to an extra 1,000 euros for a four-person family, excluding the EU's standard value-added tax of 19%.
The plan to eliminate VAT on the levy may raise legal objections from the EU, Lindner admitted. He vowed to "make every legal and political effort" to avoid additional burdens on the consumers.
The Association of German Chambers of Commerce and Industry (DIHK) said in late July that a growing number of enterprises in Germany are forced to stop or reduce production due to increased gas prices.
An evaluation issued by the DIHK on Monday showed that "a total of 16% of industrial companies are forced to respond to the current energy situation by reducing production or partially abandoning some areas."
According to the evaluation, the energy-intensive economy is particularly badly affected: the values here are consistently twice as high as the average for the industry. A total of 32 percent of these energy-intensive companies are dealing with a reduction in production or a (partial) task of business areas. Almost a quarter of them, i.e. a total of 8 percent of all energy-intensive companies, have already implemented appropriate measures. A further 10 percent of the energy-intensive say they are in a corresponding dismantling process, and an additional 14 percent have such steps in their planning.
The DIHK evaluation also shows that many companies still have to procure significant quantities of gas for 2022 in the middle of the year. Only half of the industrial companies have already covered their gas requirements through contracts. More than a third still have to buy more than 30 percent of their annual requirements for 2022. This corresponds to a projected volume of up to 50 terawatt hours of gas.
Read more: Germany's chemical giant may close plant due to gas shortage – WSJ
