According to the “Frankfurter Allgemeine Zeitung”, the new tax estimate is not expected to offer any room for reducing the electricity tax for everyone. The report explains that the improved economic situation will not only lead to higher tax revenues, but it will also reduce the cyclical component within the debt rules. Based on information from the FAZ, the Federal Ministry of Finance estimates that this effect will limit the maximum permissible borrowing by 2.5 billion euros.
Previously, the government’s spring projection anticipated a nominal Gross Domestic Product growth of 3.8% for the coming year, but this recently increased to 4.3%. This extra 0.5% growth translates, using a rough calculation, into a tax surplus of five billion euros, roughly half of which would go to the federal government. Consequently, this situation leaves no leeway to implement a reduction in the electricity tax. Chancellor Friedrich Merz (CDU) had recently advocated using budget flexibility to lower the electricity tax for all consumers to the minimum European level, as initially planned by the coalition.
Currently, the Tax Estimate Working Group is consulting on its new forecast. Federal Finance Minister Lars Klingbeil (SPD) is scheduled to present the results this Thursday. However, tax prognosticator Jens Boysen-Hogrefe believes the electricity tax debate is destined to fail, particularly given the significant gaps in medium-term financial planning. The Kiel-based economist told the FAZ, “I don’t see even a shred of room for a reduction in the electricity tax.”
