Germany to impose gas tax on consumers

Germany is set to impose a tax on all gas consumers from October 1 to help suppliers struggling with soaring gas import prices, a bill announced on Thursday.

The tax aims to spread the additional costs of replacing Russian gas among all gas users and prevent the insolvency of gas traders.

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Households and industrial consumers with long-term contracts will be affected by the tax, which will be valid until the end of September 2024, the document said. Gas importers will have to bear the rising costs themselves until the tax comes into force.

German Economy Minister Robert Habeck said the tax would amount to between 1.5 euro cents and 5 euro cents per kilowatt hour (Kwh), with the product available to all businesses that need to replace Russian gas.

He said the measure was difficult but important to stabilize the energy market.

“It is not known exactly how much (gas) will cost in November, but the sad news is that it is indeed a few hundred euros per household,” he said.

More details on the levy will be announced in August, according to the document. Local utility association VKU welcomed the measure, adding that the tax should be increased or extended if high prices persist.

A precondition for the triggering of the mechanism by the government is a significant disruption of gas flows to Germany. Gazprom’s Russian cut is running through the Nord Stream 1 gas pipeline at just 20% capacity this week.

Germany last month moved to the second of three stages of its contingency supply plan, allowing the government to trigger a price adjustment clause so suppliers can pass on price increases to their customers, although he has not yet done so.

A general tax that would increase gasoline prices for everyone, regardless of supplier, is however considered fairer.

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