In Berlin there is confusion about the relief for gas consumers through the reduction in VAT.

On Thursday, Chancellor Olaf Scholz (SPD) announced a reduction in the rate on gas consumption from 19 to 7 percent in order to cushion the burden of the new gas procurement and gas storage levies.

Christian Geinitz

Business correspondent in Berlin

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Julia Loehr

Business correspondent in Berlin.

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The reduced tax is to apply during the term of the procurement levy from October 2022 to the end of March 2024.

According to Scholz, this should ensure “that gas customers do not incur any additional burdens from the mandatory levying of value added tax on gas surcharges”.

He explicitly addressed all levies, including the existing balancing levy, which had been increased on Thursday, and then said: "With this step, we are relieving gas customers significantly more than the additional burden caused by the levies." was understood in such a way that all additional costs induced by the surcharges would be overcompensated, i.e. that there was no burden compared to the previous situation, but a net relief.

Tax cuts don't equal costs

But that is not the case.

The comparison portal Check24 calculated a tax reduction of 433 euros for a household with a consumption of 20,000 kilowatt hours.

But the gas storage levy alone costs 518 euros, meaning that the family has to pay a total of 85 euros more.

The Verivox portal comes to an additional 105 euros and makes it clear: "The tax reduction does not offset the costs of the gas levy."

Without the new levies and with 19 percent tax, a kilowatt hour previously cost 20.43 cents.

With a reduced rate, but the additional premiums, it will be 21.63 cents in the future, i.e. 1.2 cents or 5.8 percent more.

In the federal press conference on Friday, a government spokesman tried to portray the confusion as a misunderstanding: "What we meant, and that's what the Chancellor meant, is what we overcompensate for, so to speak, the additional burden of VAT on the levies, not the additional burden of the levies overall .” Conclusion: It's complicated.

Economy needs effective support

Meanwhile, demands for more financial support came from the economy.

The reduction in VAT does not help companies because it is only a transitory item for them.

The General Association of the Textile and Fashion Industry wrote that "actually effective support programs for medium-sized industry" are now necessary.

The German Hotel and Restaurant Association called for a cap on energy costs and a permanent 7 percent VAT on food.

The reduced rate was introduced at the beginning of the corona pandemic and has so far been limited to the end of the year.

The subsidy program launched by the government in mid-July is aimed exclusively at companies that operate in an industry that the EU classifies as energy-intensive.

By the beginning of the week, only 69 companies had submitted applications and only 20,000 euros had been paid to one company.

5 billion euros are available.

Now the pressure is growing on Economics Minister Robert Habeck (Greens) to expand the group of beneficiaries.

Little is known about other reliefs for private households announced by Scholz.

As reported by the Federal Ministry of Building, the concept for the housing benefit reform is as good as finished, but still has to be coordinated in the cabinet and also with the federal states, which pay half of it.

The details should be available by the end of the month.

Not only low-income workers can apply for housing benefit, but also seniors with low pensions.

Who gets how much money depends on the number of household members and the rent or living costs in your own four walls.

In a sample calculation, the Ministry points out that a mother with a child in Berlin who earns 2,000 euros a month – gross income counts, but with certain deductions – and pays 850 euros in rent without taxes is entitled to 177 euros in housing benefit.

There has been a CO2 surcharge since 2021.

The background is the CO2 price on gas and oil that was introduced at the time.

In the summer of 2022 there was also a heating subsidy of 270 euros for a one-person household and 350 euros for a two-person household.

A heating cost subsidy is now to be permanently integrated into the housing benefit reform.