Germany to raise aviation levy as part of budget package

The German government aims to raise the levy on passenger flights as part of a comprehensive budget package for 2024 and the following years to fill the billion-euro gap caused by a recent court ruling. Earlier media reports had said the government aimed to introduce a national tax on kerosene. While this is not the case, the levy increase is meant to raise revenues equal to the current kerosene tax breaks. The levy increase is among a more detailed list of measures the ruling coalition aims to introduce to fill a 17-billion-euro hole in the 2024 federal budget plans. Table.Media reported that only about half of that amount will be filled through cuts. The other half is made up of the use of reserves from special funds that are not affected by the budget ruling (3.2 billion euros), reduced interest expenditure (2.3 billion euros), unspent money from the Economic Stabilisation Fund that is dissolved at the end of the year (0.4 billion) and possible new debt to help support victims of floods (2.7 billion euros) – where it remains unclear whether this would be in line with debt limit rules. The government said the coalition aims to debate the 2024 budget in parliament by mid-January and adopt it at the end of the month.

The budget crisis was sparked in November when the country’s constitutional court ruled that the plan to transfer 60 billion euros to a special fund earmarked for climate and transformation projects was unlawful. In response, the government decided last week to cut spending on various projects by billions of euros. The government said it aims to still implement large parts of a package of measures to lower electricity prices, which it decided in November. The electricity tax will be lowered for manufacturing companies and a subsidy scheme to compensate energy-intensive companies for parts of the CO2 costs for electricity under the EU Emissions Trading System (EU ETS) extended. However, there will be no subsidy of around 5 billion euros to keep rising grid fees in check. “The need for a climate-neutral transformation of the economy has increased in urgency, also in order to secure competitiveness, value creation and jobs,” writes the government, and says the ailing economy must be revitalised through “targeted stimuli for economic growth.”