Expectations are high. Federal Minister of Finance Christian Lindner (FDP) promises a “massive relief package” for the Germans battered by rising prices, Chancellor Olaf Scholz (SPD) promises a “very tailor-made relief package”. That should be available shortly, said SPD party leader Saskia Esken on Thursday. Due to the sharp rise in prices for energy and many consumer goods, the traffic light coalition has already decided on several relief steps, some of which have already been implemented. The federal government is currently working on a third package of measures.
After the government did not make any decisions during its retreat, the coalition committee of the SPD, FDP and Greens is now supposed to bring about a breakthrough at the weekend. A package of measures is being discussed.
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However, not all proposals currently on the market make sense. This is shown by a study presented on Thursday by the consulting firm DIW Econ, a subsidiary of the German Institute for Economic Research, on behalf of the Climate Alliance Germany. The alliance is backed by more than 140 organizations from the areas of environment, church, development, consumer protection, social affairs and trade unions.
The author of the study, Maximilian Priem, is particularly critical of the gas price cap favored by the SPD. According to this, the gas price for a basic requirement of 8000 kilowatt hours (kWh) is to be capped at 7.5 cents per kWh. Priem warns that such a measure would primarily benefit better-off households that live in thermally insulated properties and therefore need less gas for heating. He criticizes that an intervention in the price also sends out the wrong signal. High prices call for saving energy and phasing out fossil fuels, a price cap counteracts that. According to new calculations by the comparison portal Check24, the prices for heating in August rose by 165 percent compared to the same month last year. Gas cost an average of 235 euros per MWH on the exchange, compared to just 44 euros a year ago.
“The acute political answers to the energy crisis must be designed in such a way that climate protection, security of supply and social justice are taken into account in a balanced manner,” explained the Deputy Managing Director of Climate Alliance, Malte Hentschke-Kemper. What is needed is a “forward-looking overall solution”.
All German citizens have become poorer as a result of the energy crisis, stressed Priem. However, the state cannot help everyone, but should concentrate on targeted measures that primarily benefit the socially disadvantaged.
Instead of the gas price cap, the study therefore recommends a renewed heating cost subsidy for housing benefit recipients. 270 euros had already been paid in the previous relief package. In the new package, Priems estimates, it should be around 550 euros. Around 700,000 households in Germany are currently receiving housing benefit, including pensioners and students.
The help is given to people with low incomes that are above the Hartz IV limit. With Hartz IV and basic security, the heating costs are covered by the state. Chancellor Scholz has already announced that the housing benefit will be reformed and the number of recipients will be expanded. Even then, according to Priem, the heating cost subsidy will probably only cost the state one billion euros and thus nine billion less than the gas price cap.
In order to enable Germans with a tight budget to continue to travel, the study advocates a nationwide valid 29-euro ticket for local public transport as a successor to the nine-euro ticket. However, money would then also have to be invested in new trains, demands Viviane Raddatz from WWF Germany.
The study is also in favor of replacing the commuter allowance, which brings greater tax relief to long-distance commuters than people with short commutes, with a mobility allowance. That should be ten cents per kilometer – regardless of whether you travel by bike, bus or car. According to Priem, low earners in particular would benefit from this, as they would not have benefited much from the previous tax savings.
A 29-euro ticket and other measures could be financed “through the reform of climate-damaging subsidies such as the company car privilege and the commuter allowance,” explained Carolin Schenuit from the Forum Ecological-Social Market Economy. In Germany, spending on climate-damaging subsidies totaled 60 billion euros, and the abolition of company car and diesel privileges alone would save the state ten to eleven billion euros.
As far as the increase in food prices is concerned, the study considers a reform of the value added tax to be fundamentally sensible. While VAT on animal products should be increased from 7 to 19 percent, fruit, vegetables and grain products should be exempt from the tax. In view of the current price increases, however, Priem doubts that such relief will reach consumers at the moment.
The factions of several parties in the Bundestag are also discussing energy policy and rising prices. While the Green factions are finishing their retreat in Potsdam on Thursday, the SPD faction and the leaders of the Union faction are coming together for retreats.
The first two relief packages, which had a volume of 30 billion euros, relieved all citizens, emphasizes Priem. However, the relief for the lowest-income households was significantly less than that for the financially better off. Poor people are “much more affected by fossil fuel inflation,” emphasized the President of the German Caritas Association, Eva Maria Welskop-Deffaa. She called for a moratorium on electricity and gas cuts this winter, “so that over-indebted households don’t have to sit in the dark and cold”.
The SPD parliamentary group leader had proposed relieving citizens with direct payments, a price brake for basic energy requirements and a nationwide 49-euro ticket for local and regional public transport. Against the background of the drastically increased energy prices, the Union MPs invited the CEO of Germany’s largest energy supplier Eon, Leonhard Birnbaum, to the consultations on Thursday.
“This war has economic and social consequences that will keep us busy for a long time,” said Federal Labor Minister Hubertus Heil on Thursday night on the ZDF program “Markus Lanz”. “The state (…) cannot cushion everything for everyone, but it has to do it in a targeted manner.”