Federal budget | Electricity tax: promises broken

If you believe Tim Klüssendorf , there are hardly any differences left in the black-red coalition government when it comes to electricity tax. He looked forward to the coalition committee, which was to discuss this and savings in the citizen's income on Wednesday evening. He was confident that "common solutions can be found," said the SPD general secretary on Wednesday in the ARD "Morgenmagazin." It was good that the Chancellor had admitted "communication problems" and that they now wanted to tackle these together. The agreement on the draft budget had been strongly attacked "from one side," said Klüssendorf. This had given rise to fears of "getting back into this traffic light mode." He wanted to help prevent "this spiral of escalation" from happening again. However, compromises should then no longer be attacked.

But what compromise are the Social Democrats defending? The coalition agreement between the three governing parties states that they want to permanently reduce electricity tax for businesses and consumers by at least five cents per kilowatt hour. "As an immediate measure, they will reduce the electricity tax for everyone to the European minimum and reduce surcharges and network charges."

But the paper is once again being patient. Federal Finance Minister Lars Klingbeil (SPD) had already stated at the presentation of the coalition agreement that everything announced was subject to funding. Last week, Klingbeil, Chancellor Friedrich Merz, and Economics Minister Katherina Reiche (CDU) agreed that the relief would initially only apply to businesses, not to private households, which currently pay an electricity tax of 2.05 cents per kilowatt hour.

The tax will be reduced for industrial companies and businesses in agriculture and forestry. Klingbeil announced this last week when presenting the government's budget plans. He pointed to the difficult financial situation and the coalition's commitment to presenting a solid budget.

This caused outrage, particularly among social organizations and the opposition. The government is accused of backpedaling on its first promises after just a few weeks in office. Meanwhile, protests are also coming from the CDU/CSU. On Monday, the parliamentary group leaders of the CDU and CSU called on the federal government in a paper to further reduce electricity taxes: "The electricity tax needs to be swiftly reduced to the European minimum for all companies and all consumers."

Last week, North Rhine-Westphalia's CDU Minister-President Hendrik Wüst accused the SPD and Vice-Chancellor Klingbeil of "threatening" a "key relief promise" made by the government and of offending businesses and "millions of families."

Left Party co-chair Ines Schwerdtner, however, called the outrage from CDU/CSU circles "dishonest." While the electricity tax cut for private households must come into effect, the budget politician explained on Wednesday, it is "just a drop in the ocean." Relief is needed "for shopping, rent, and energy prices," the budget politician said. This would have "more economic effects than gifts to corporations that ultimately only end up in the pockets of shareholders." Schwerdtner continued: "People are not served if what is put in their left pocket is taken out of their right pocket. Instead of a shell game with social spending, we need redistribution toward the majority of people. That means wealth tax, rent control, a minimum wage of €15, and the abolition of the debt brake."

Meanwhile, the SPD is angrily pointing out that this was a joint decision by all coalition partners. The Finance Ministry complained to the "t-online" portal that it was unacceptable for the SPD to be the "target" of criticism of joint decisions. If the tax cut to the European minimum were to apply immediately to everyone, it would mean a revenue shortfall of €5.4 billion annually for the federal government. The ministry also pointed out that the federal government faces "as yet unexplained funding gaps," especially from 2027 onward.

The coalition committee is discussing the government's planned "savings" regarding the citizen's income. SPD General Secretary Klüssendorf said that savings of one billion euros are planned for next year and another 3.5 billion for 2027. This "means that the limit has been reached, so there won't be much more to be gained from it."

According to information from the German Press Agency, annual savings on the citizen's allowance are to be as high as €1.5 billion next year, and later €4.5 billion. However, to achieve a reduction in expenditure of €1.5 billion, 100,000 recipients would have to be completely removed from the system, calculated Andrea Nahles, Chairwoman of the Federal Employment Agency. On the one hand, many are still dependent on supplementary social benefits even with jobs, she said on Wednesday in Nuremberg. On the other hand, sanctions against citizen's allowance recipients who do not comply with the regulations have recently "earned" just €100 million. Even if this could be tripled by tightening the rules, we are "still a long way from the target," Nahles said.

Nahles expects the greatest impact on her department's budget from the planned "change of legal jurisdiction" for the Ukrainians. This would result in savings of €900 million in Social Code II – the legal jurisdiction in which recipients of citizen's allowances are located. However, the federal government must continue to pay for the war refugees, so this is merely a transfer of funds. In the future, the Ukrainians will receive their benefits through the Asylum Seekers' Benefits Act. Municipalities will be responsible for these payments, but they will then receive relief payments from the federal government due to the considerable additional costs.