Finance ministry’s energy cost relief plans lack sustainability components – NGO

The German finance ministry (BMF) is working on a scheme to further reduce the financial burden of gas price increases, which are expected to hit many households and businesses hard in the coming months. As energy providers adjust their prices to reflect the turmoil caused by Russia’s war on Ukraine, finance minister Christian Lindner from the pro-business Free Democrats (FDP) is working on a scheme to reduce the burden on taxpayers by about 10 billion euros next year, news magazine Der Spiegel reports. The scheme will reportedly use inflation gains by the state to fund additional expenditures. NGO Green Budget Germany (FÖS) criticised Lindner’s approach for disproportionately benefiting high earners and lacking any sustainability component, given the direct links to energy policy. Green Budget’s Carolin Schenuit told energy policy newsletter Tagesspiegel Background that “ecologically damaging” tax privileges, for example one for company cars, which is currently costing the state about five billion euros per year, would be much more suitable for addressing soaring energy costs. Undoing the tax exemption for kerosene would bring another 8 billion in additional earnings to the state’s coffers and simultaneously bring energy taxation in line with the EU’s Fit-for-55 scheme, Schenuit said.

Chancellor Olaf Scholz’s Social Democrats (SPD) would like to raise Germany’s tax revenues with a tax on windfall profits enjoyed by many energy companies amid the price hikes of recent months – a model that has been applied in a range of other countries including Italy, Greece and the UK. Lindner firmly rejects a windfall tax, arguing that it would punish energy companies “just because they are unpopular.” A tax on massively rising profits would undermine trust in Germany as an investment location and also apply to pioneers in renewable energy production, such as wind power operators, who currently also enjoy high earnings, he said.