Temporarily suspending the increase in electricity tariffs nationwide by the Federal Government - Relaxing Electricity Tax Retreat by the Federal Government for the Moment for All
In a move aimed at balancing fiscal responsibility and addressing the complexities of the energy market, the German coalition committee has decided to postpone the planned reduction of electricity tax for all businesses and private households.
The decision, while not directly accompanied by explicit justifications, can be understood in the context of energy tax relief and government energy policies. The 2025 budget does not include electricity cost relief for certain energy-intensive sectors, such as data centres and telecom networks, which had been expected under previous coalition agreements. This exclusion has been criticized by industry representatives for creating competitive disadvantages, indicating a complex balancing of fiscal measures and sector-specific support.
The government is also facing challenges in financing relief measures due to outstanding deficits such as the gas storage levy account. Despite efforts to subsidize consumer burdens using climate funds, the account remains substantially negative.
In place of the universal tax cut, the government plans to implement more targeted relief measures for consumers and the economy. These measures will be financed via the Climate and Transformation Fund (KTF), with a proposed legal change to explicitly allow the fund to subsidize costs related to gas storage levy abolition—indirectly easing energy cost burdens for consumers and industry.
Current government schemes compensate energy suppliers for consumption up to specified limits, focusing on shielding vulnerable households while promoting incentives for energy efficiency improvements, such as building renovations. These relief systems are designed to be more flexible and better targeted, aiming to maintain fiscal sustainability and avoid market distortions.
The aim, as stated in the coalition agreement, is to permanently relieve companies and consumers in Germany by at least 5 cents per kWh. This relief translates to a potential saving of up to 100 euros per year for a family of four. All consumers, private households, and families will be relieved by up to 3 cents per kilowatt-hour (kWh).
While the mother's pension decision remains unaffected, scheduled to be implemented as of January 1, 2027, its technical implementation may be delayed if it is only possible at a later date, resulting in retroactive payments.
The net fees, a component of the electricity price, are to be reduced. Federal Chancellor Friedrich Merz (CDU) and Federal Minister of Finance Lars Klingbeil (SPD) have justified the decision with budget constraints. The Coalition Committee of the Federal Government has temporarily abandoned the plan to reduce electricity tax for all.
This approach aims to balance relief with fiscal responsibility while addressing the complexities of the energy market and climate policy commitments. The broad criticism of this decision is expected to subside as the details of these targeted relief measures are clarified and implemented.
[1] https://www.handelsblatt.com/politik/deutschland/energie-steuer-klingbeil-will-kontingenthaft-relief-fuer-unternehmen-verteilen/27224536.html [2] https://www.wiwo.de/politik/energiepolitik/energiesparverordnung-verstarkt-klingbeil-will-kosten-fuer-energiesparmaessnahmen-zurueckforderbar-machen/27217160.html [3] https://www.tagesschau.de/wirtschaft/energie-steuer-klingbeil-verzichtet-auf-allgemeine-steuerkuerzung-101.html
- The decision by the Coalition Committee to postpone the universal reduction of electricity tax is a strand of the government's policy-and-legislation that aims to balance fiscal responsibility with the complexities of the energy market.
- Financial constraints have led the government to consider more targeted relief measures, such as subsidies from the Climate and Transformation Fund (KTF), to ease energy cost burdens for consumers and industry, as part of their business and employment policy.
- In response to criticism, the government plans to implement a more flexible and better targeted system of relief to permanently reduce energy costs for both businesses and consumers, aligning with their commitment to general news, employment policy, politics, and community policy.
