Help due to high energy prices: Relief package at a glance

Status: 03/24/2022 2:00 pm

The federal government’s decision to mitigate the effects of costly energy will cost about 15 billion euros. Who gets relief where – how to get money? The most important details and what the experts say about it.

After a long struggle, the Traffic Lighting Alliance allies have agreed to a comprehensive relief package. According to Finance Minister Christian Lindner, this is similar to the first package introduced by the federal government in Ukraine before Russia’s invasion – and he estimated it at 14 to 16 billion euros. Leaders of the SPD, FDP and Greens said today that the “middle” of society must now be liberated quickly, unofficially and with social justice.

300 Euro Energy Price Flat Rate

At the heart of the package is a one-time energy charge of 300 euros. This applies to all employees subject to income tax, i.e. not to retirees. In addition to the salary is paid – that is, through pay. This one time payment will be made regardless of the passenger allowance, mobility bonus or work ticket. However, it is subject to income tax. SPD President Lars Klingbeil explained that the self-employed should receive the lump sum in the form of a reduced tax advance.

A one-time bonus of 100 euros for families with children

In order to resolve specific difficulties for families, a one-time bonus of 100 euros must be paid to the Family Welfare Office for each child as soon as possible with child welfare. The bonus is offset against the child allowance.

100 euros for welfare recipients

The lump sum payment of EUR 100 will be increased to EUR 100 per person for those who have already decided on social benefits. In addition, with current energy prices, by January 1, 2023, it can be assumed that sustainable demand will reflect a higher price increase, so according to the Transport Lighting Alliance partners, it will increase accordingly.

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Fuel tax reduction

Passengers and frequent drivers may sigh with relief: refueling at the pump may be a little cheaper in the future. Petrol price should be reduced by 30 paise per liter and diesel by 14 paise per liter. The federal government makes this possible by reducing the energy tax on fuel to the European minimum. However, the restriction only applies for three months, until the end of June. “We do not want to allow people, passengers, families and businesses to rely on cars because of rising fuel prices,” said Finance Minister Lindner. The “tank discount” he originally planned is not currently on the table.

9 euro monthly ticket for public transport

The coalition is also trying to reduce fuel and energy prices and force citizens to switch to public transportation. Tickets for 9 9 a month are to be introduced nationwide, valid on public buses and trains. This cheap monthly ticket is available for 90 days. The necessary funds should be provided to the states for this. It is not yet clear whether the ÖNPV ticket will be valid for use on local public transport in a city, region or across Germany.

Mandatory replacement of old gas heaters

At the same time, pressure is mounting on real estate owners with older gas or oil heating systems. Not only from 2025, but already from 2024, every newly installed heating system must be operated with 65 percent renewable energy. For this purpose, the Alliance wants to launch a heat pump attack. It is not yet clear how this should be and what the financial awards should be.

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Green leader Ricardo Long insists on phasing out gas heating. Gas consumption in power generation is to be reduced in the short term. Deactivation of coal-fired power plants will be suspended. Coal-fired power plants have to be put on hold for long periods of time. However, the federal government is determined to phase out coal by 2030.

What economists say

The new energy price relief package has met with mixed reactions from economists. “This agreement means a relief with the irrigation can, so it is financially expensive and not very accurate,” President Clemens Fust criticized. “Reducing gas prices is a mistake.” The advantage was that it was limited over time. “It would have been better to release small and medium-sized companies, especially those with higher fuel costs,” Foust said.

ING chief economist Carsten Preski praised the move, saying it would provide some relief to consumers in the short term. However, the package may not be large enough to absorb all the negative economic consequences of higher prices.

“Low-income families benefit”

“The support of low-income families is absolutely essential in the current situation,” said Jens Poison-Hogref, a tax expert at the Kiel Institute for the World Economy. Therefore the increase in exchange payments on basic security is credible and welcome. “Low-income families who do not receive transfer payments benefit from family payments and flat-rated energy prices.”

However, the set of measures goes a long way and provides “incentives for additional energy consumption through a temporary reduction in the power line”. At the same time, making public transportation significantly cheaper may force some to give up their own cars. But this should not only influence the choice of transportation, but also increase the general need for movement, which should not really be the goal, Poison-Hogref said. Measures to reduce energy consumption are long-lasting and have almost no effect in severe conditions.

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Tax reduction for SUV drivers

Economist Achim Drooker described the set as a classic compromise that saves the face of everyone involved. “From a stimulus standpoint, a temporary reduction in the mineral oil tax would be detrimental and not very accurate,” said Trueker, a member of the advisory board. Flat-rate energy money and baby bonuses can be seen as a quick introduction to flat-rate climate money, which is also being launched for binding.

“The good news is: the FDP’s proposed tank discount will not come, it would have been the worst tool of all,” explained Jens Sudek, a member of the Federal Ministry of Economic’s Scientific Advisory Council. “The temporary reduction in energy taxes will also lower the price of petrol and benefit everyone, including those who make more money with larger SUVs.” However, the right tool is energy money. “300 euros at a time creates instant relief,” Südekum said. “Because they are taxed, lower earners make more profit.”

The first relief package would eliminate the EEG surcharge used to fund the expansion of renewable energy by mid-year. There is also a subsidy for the current heating season, which benefits homeowners, students and coaches.

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