Germany Rethinks Gas Levy Following Major Outcry

A plan by the German government to add to consumers’ tax burden in order to shield gas importers from excessive prices prompted backlash from within. This, in turn, led to Economy Minister Robert Habeck suggesting that the government would instead selectively offer this financial support.

The economy minister admitted it was “certainly not morally correct” to provide financial assistance to companies that not only did not suffer from higher gas prices but in fact benefited from them, Bloomberg reported today.

“All I’m saying is, let’s look at that again,” Habeck said in a speech cited by Die Welt, following calls for rethinking the handouts and windfall profit taxes for gas utilities. Germany’s finance minister ruled out a windfall profit tax.

“However, there is a relatively high hurdle,” Habeck also said. “If we start to play games and that brings lawsuits - and there will definitely be lawsuits in one direction or another - and the levy is scrapped, then we will still have the same problem: some companies and citizens will experience a collapse in gas supply.”

The issue highlights the difficult environment the German government has to navigate as gas and electricity prices keep breaking record after record and supply remains constrained.

The gas levy on consumers was part of efforts to deal with this situation as a failure of one of the large gas utilities in Germany could have a ripple effect on the whole economy. The levy, which is scheduled to take effect in October, was set at 0.024 euros per kilowatt-hour. It will expire at the end of March 2024.

Since its announcement, a dozen utilities have filed applications for financial aid to the tune of 34 billion euros, equivalent to almost the same amount in dollars.

“I’m just trying to be fair, but above all, I have an obligation to maintain security of supply in Germany - for better or worse,” Habeck said in his speech. “We will see if we can find a legally secure way of stopping these companies making improper use” of the handout program.

By Irina Slav for Oilprice.com

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