The sales tax on natural gas and district heating, which is often referred to as value added tax, will drop from 19 to 7 percent on October 1st. The German Bundestag decided on Friday. The reduction should apply until the end of March 2024. SPD, CDU/CSU, Greens, FDP and AfD voted for the draft in a version amended by the finance committee, the left abstained.
Rising energy prices are already a major burden for many citizens, it said in support of the law that has now been passed. The striving to make Germany independent of Russian natural gas as quickly as possible could strengthen the development. The justification states that the gas levy would also cause consumer prices to rise; the federal government withdrew this on Thursday.
The government expects businesses to pass on the full sales tax cut to consumers. “Unfortunately, the state cannot guarantee that it will be passed on to consumers,” admitted the financial politician of the Greens, Katharina Beck. “And you also relieve those who consume a lot and tend to have more money than those who consume little and tend to have less money.” Nevertheless, the overall package is right.
11.26 billion euros shortfall in revenue
Gas and sales tax accounted for around 25 percent of the gas price in 2020, procurement and sales accounted for almost 50 percent and the network fee for 23 percent. The rest is accounted for by the costs for measuring points and the concession fee.
The reduced revenue from the sales tax reduction is estimated at a total of 11.265 billion euros by 2024. According to the comparison portal Verivox, prices would have to fall by 7.3 percent if the tax cut was passed on in full to consumers. For a gas consumption of 20,000 kWh, that would mean savings of 366 euros per year.
Chancellor Olaf Scholz had announced the reduction in sales tax in mid-August. The Federal Ministry of Finance justified the procedure by not completely eliminating the sales tax on natural gas because European law prescribes minimum tax rates. The decisive factor for the current tax rate is when the meter is read.
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