Government Reconsidering Plans to Increase Energy and Electricity Taxes

The government’s recent austerity package contained plans to increase the energy and electricity tax by revoking exemptions. This plan may be softened, Chancellor Merkel announced at an event organized by Bundesverband der Deutschen Industrie (Umbrella Organization of German Industry – BDI).

“I promise that we will review our plans. It is not our intention to negatively affect the good labour market figures by doing something that costs jobs”, Mrs Merkel told the audience.

The government had originally planned to raise additional tax revenue of between EUR 1.16 billion and EUR 1.5 billion annually between 2011 and 2014 by cutting tax exemptions. The industry, however, had warned of job losses.

At the event in Berlin BDI President Hans-Peter Keitel pointed out that Germany was the only country that wanted to impose a financial burden on its enterprises in the current economic environment. According to Mr Keitel, taxes for some energy-intensive companies would increase sevenfold. This would affect 870,000 jobs. Some companies would even have to pay all their profit, he claimed.

Claudia Kempfert, head of the department of energy, transportation and environment at the German Institute for Economic Research (DIW) in Berlin said she disagreed with BDI. The proposed amendments were necessary as the exemptions had lead to a free-rider effect for some companies. Besides the ecological objective of the tax was undermined by the exemptions. Companies that specifically relied on energy would still benefit from high tax exemptions, Mrs Kemfert pointed out. She probably referred to the compensation payments (Spitzenausgleich) for energy-intensive companies, where a reduction from 95% to 73% is being discussed.

Source: ARD, BDI, Handelsblatt

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