DThe German municipal economy advocates for maintaining the reduced value-added tax rate for gas and heat supplies until March of next year. At the same time, the energy price brakes should expire as planned at the end of the year, according to the Association of Municipal Companies (VKU), which opposes proposals from Federal Minister of Economic Affairs Robert Habeck (Green Party) and Finance Minister Christian Lindner (FDP).
The brakes on electricity and gas prices are actually supposed to expire at the end of the year. They cap the price for a large portion of household consumption. The maximum limit for the price brake is 40 cents per kilowatt-hour for electricity and 12 cents per kilowatt-hour for gas. Habeck advocates for an extension of about a quarter of a year until Easter. Lindner supports this, but also demands the increase of value-added tax on natural gas from 7 to 19 percent, three months earlier at the beginning of the year.
„If, according to the Federal Government, energy consumers need to continue to be protected from unexpected price increases, then the Federal Government should maintain the reduced VAT rate,“ said VKU Managing Director Ingbert Liebing. „However, the proposed extension of price controls while simultaneously raising the reduced VAT rate lacks any logic, is inefficient, may not be technically feasible in time, and therefore not effective.“ We reject an early expiration of the reduced VAT rate for gas and heat supplies at the end of 2023 because it would risk overburdening municipal utility customers in the middle of winter. Instead, we should stick to the original plan.“