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ENERGY

German taxpayers to receive €300 lump sum for energy costs

After a meeting late on Wednesday evening, the German government managed to agree on a package of relief measures for households struggling with energy costs, including cut-price transport tickets and a one-off energy allowance.

A woman adjusts the thermostat on her radiator.
A woman adjusts the thermostat on her radiator. Photo: picture alliance/dpa | Marcus Brandt

The new measures, which include a one-off €300 energy allowance for workers, should offer quick and unbureaucratic relief for low- and middle-income earners, the government said on Thursday.

When the allowance comes in, all employed persons liable to income tax will be paid a one-time flat-rate energy allowance of €300 as a supplement to their salary.

In their original proposals, the SPD had envisioned this money being paid out via the 2023 tax return, which would have the disadvantage of not reaching consumers’ pockets for another two years.

But the government is working on quicker way to release the money to struggling households via monthly salary payments for employees or a cut in advance tax payments for the self-employed. 

People on social welfare such as unemployment benefits are also set to receive a €200 lump sum this year ahead of a review in the living costs allowance.

In addition to the one-time payouts, the traffic-light coalition is also planning a tax cut on fuel for drivers, improved energy efficiency measures and more relief measures for middle- and low-income families.

It will also introduce the SPD’s plans for a ‘child bonus’ on €100 per child, similar to the one introduced during the height of the Covid crisis. 

READ ALSO: Key points – Germany’s proposals for future energy relief

Public transport ticket

There are also plans to slash prices on public transport with a 90-day ticket for just €9 in an attempt to encourage financially burdened car drivers to switch to greener transport options. 

“Taking the bus and train will probably never have been cheaper in Germany,” said Green party co-leader Ricarda Lang. 

The traffic-light coalition of the SPD, Greens and FDP had met at 9pm on Wednesday to thrash out a package of measures that each of the parties would be happy with.

Many of the measures were hotly debated within the cabinet.

One of the most controversial plans – a proposal for a petrol rebate put forward by Finance Minister Christian Lindner (FPD) – didn’t make it into the finalised package. 

Announcing the measures on Thursday morning, the coalition promised that the “middle” of society would be relieved efficiently and in a socially just manner.

FDP leader Christian Lindner said the agreement of the coalition leaders was proof of the government’s ability to take decisive action. 

“The coalition is convinced that we have to protect the people and the economy in the face of these enormous price increases in the short term and for a limited period of time,” he said.

The coalition had agreed on a first relief package in February before the outbreak of the Ukraine war.

Among other things, it provided for the abolition of the Renewable Energy Act (EEG) surcharge, worth billions, on electricity bills from July.

Previously, this was planned for the beginning of 2023. The package also included an increase in the commuter allowance for long-distance commuters.

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

Member comments

  1. Not sure I am a fan of constantly using tax payer money to support flawed policies. In the end the message is don’t work too hard and earn more as the government will just take it from you and pass it along to others. How about reducing the size of government in Germany, it has to have the most tax payer representatives per capita of any developed country.

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ENERGY

Should tenants in Germany be shielded from energy price hikes?

Gas prices have more than tripled in the past year, prompting tenants' rights advocates to call for more social support and a cap on energy costs.

Should tenants in Germany be shielded from energy price hikes?

The German’s Tenants’ Association is calling on the government to put together a new energy relief package to help renters deal with spiralling energy costs.

Gas has become an increasing scarce resource in Germany, with the Economics Ministry raising the alert level recently after Russia docked supplies by 60 percent.

The continued supply issues have caused prices to skyrocket. According to the German import prices published on Thursday, natural gas was three times as expensive in May 2022 as it was in May a year ago.

In light of the exploding prices, the German Tenants’ Association is putting the government under pressure to offer greater relief for renters.

READ ALSO: 

Proposals on the table include a moratorium on terminating tenancy agreements and a permanent heating cost subsidy for all low-income households.

The Tenants’ Association has argued that nobody should face eviction for being unable to cope with soaring bills and is urging the government to adjust housing benefits in line with the higher prices. 

Gas price cap

Renters’ advocates have also joined a chorus of people advocating for a cap on consumer gas prices to prevent costs from rising indefinitely.

Recently, Frank Bsirske, a member of the parliamentary Green Party and former head of the trade union Verdi, spoke out in favour of capping prices. Bavaria’s economics minister and Lower Saxony’s energy minister have also advocated for a gas price cap in the past. 

According to the tenants’ association, the vast majority of tenants use gas for heating and are directly affected by recent price increases.

At the G7 summit in Bavaria this week, leaders of the developed nations discussed plans for a coordinated cut in oil prices to prevent Russia from reaping the rewards of the energy crisis. 

In an initiative spearheaded by the US, the group of rich nations agreed to task ministers will developing a proposal that would see consumer countries refusing to pay more than a set price for oil imports from Russia.

READ ALSO: Germany and G7 to ‘develop a price cap’ on Russian oil

A gas price cap would likely be carried out on a more national level, with the government regulating how much of their costs energy companies can pass onto consumers. 

Strict contract laws preventing sudden price hikes mean that tenants in Germany are unlikely to feel the full force of the rising gas prices this year

However, the Tenant’s Association pointed out that, if there is a significant reduction in gas imports, the Federal Network Agency could activate an emergency clause known as the price adjustment clause.

This would allow gas suppliers to pass on higher prices to their customers at short notice. 

The Tenants’ Association has warned that the consequences of an immediate market price adjustment, if it happens, should be legally regulated and socially cushioned.

In the case of the price adjustment clause being activated, the government would have to regulate the costs that companies were allowed to pass onto consumers to prevent social upheaval. 

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