February 9, 2023

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Germany is building a gas tax to protect its energy system from bankruptcy

Winter will certainly be more expensive for German gas consumers. Apart from price hike, all bills are subject to additional tax. On Monday, August 15, the government announced its amount: 2.419 centimes per kilowatt hour (kWh) consumed from 1.There is In October, that means 20,000 kWh per year for a family of four living in a single household, excluding surcharges and VAT of almost 500 euros per year.

The purpose of this line, already highly controversial, is to guarantee the stability of the country’s energy system in the face of a drop in Russian gas supplies, a result of tensions associated with the February 24 invasion of Ukraine. According to Economy Minister Robert Habeck, who presented the device at a press conference on Monday afternoon, this additional contribution is a mechanism. “very beautiful” To avoid a wave of bankruptcies among gas importers, this puts the entire supply of heat and power in the country at risk.

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The drop in supply through the Nord Stream 1 gas pipeline – currently 20% of its normal flow – has indeed put importers in a critical situation. Absent Russian gas, they have to buy fuel elsewhere at higher prices while being tied to their customers through long-term contracts. Caught in a vice, these distributors were threatened with bankruptcy. Uniper, the country’s first Russian gas importer, provides several municipal services and thus benefited from the state’s emergency aid in July.

VAT negotiations

New taxation makes it possible to spread the risk as widely as possible without directly affecting the state budget. Duty importers will cover 90% of their additional purchase cost. The device will be available thanks to an intermediary company, Trading Hub Europe, which generally organizes market operations for all German gas distributors. It is responsible for collecting this direct debit revenue and disbursing it to distributors who claim it. Energy giants RWE and Shell have announced they are waiving their additional procurement costs themselves.

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One way to benefit their customers is to exempt them from tax, and the burden on everyone else is considerable. For energy-intensive companies such as chemicals, steel or glass, the surcharge linked to the tax should be 5 billion euros, the lobby representing them calculated. For individuals, the medicine is particularly bitter. Every gas-consuming household – Russian or not – should expect an increase in its bill of several hundred euros per year, to which 19% VAT may be added.

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