Cabinet Passes Austerity Package, Takes Note of Nuclear Fuel Rod Tax Proposal

The German Cabinet today passed its “Future Package” (Zukunftspaket). This Future Package is the austerity package with a volume of about EUR 80 billion until 2014. The controversial proposal for a Nuclear Fuel Rod Tax (Kernbrennstoffsteuergesetz) was only taken note of, and shall be decided upon as part of the Energy Concept on 28 September.

Technically, the package consits of a Budget Accompanying Act 2011 (Haushaltsbegleitgesetz 2011) and additional measures that will have an effect on the budget.

The proposed nuclear fuel rod tax shall funnel EUR 2.3 billion annually into public coffers starting of 2011. The new tax had been heavily opposed by the nuclear power plant operators. While they lobby for an extension of the operating times of their plants, which the government is generally willing to grant, opinions differ about the length of the extension and the financial contribution the utilities would be obliged to make in return for addional profits.

Cabinet members only took note of the draft for the nuclear fuel rod tax, the media said. A final decision will reportedly be taken in connection with the Energy Concept, which the government will present on 28 September 2010. In the meantime, discussions with the utilities shall continue.

As part of the austerity package, the government plans to revoke tax exemptions for the manufacturing industry with respect to the Electricity Tax Act (Stromsteuergesetz – StromStG) and the Energy Tax Act (Energiesteuergesetz – EnergieStG). The government expects additional tax revenue of between EUR 1.16 billion and EUR 1.5 billion annually between 2011 and 2014. In the future, the reduced tax rate will only apply if a threshold of EUR 2,500 for the Electricity Tax is exceeded (former threshold: EUR 512.50). The reduced tax rate will also rise from 60% to 80% of the regular tax. Compensation payments (Spitzenausgleich) for energy-intensive companies will also be reduced from 95% to 73%.

An air traffic tax (Luftverkehrsteuergesetz) shall bring another EUR 1 billion annually.

Sources: Federal Ministry of Finance, Frankfurter Allgemeine Zeitung, Märkische Allgemeine

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