- The German government is currently divided over whether to end the temporary reduction in value added tax (VAT) for gas deliveries before the scheduled date of March 31, 2024.
- The reduction in VAT from 19% to 7% was implemented as part of the government’s relief measures in response to the Russian-Ukrainian conflict and the resulting increase in gas prices.
- Ending the VAT reduction prematurely would result in higher costs for consumers, as suppliers would likely pass on the additional 12% tax burden.
- A colder winter or increased global gas demand without a corresponding increase in supply could further exacerbate price increases.
- Many consumers have already adjusted their budgets based on the expectation that the VAT reduction would remain in place until March 2024, and changing the timeline could undermine trust in government policies.
- On the other hand, gas prices have already decreased more than expected in 2023, and future market prices indicate a relatively stable outlook.
- Ending the VAT reduction early would provide the government with approximately €2.1 billion in additional revenue, which could be used to address other financial needs.
- The decision on whether to end the VAT reduction early will be determined during the current budget deliberations for 2024.
Source: nwb-experten-blog.de
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
