Gas customers will likely need to prepare for higher prices at the beginning of the year. The Ministry of Finance is making changes to VAT. What is the cost to the consumer?
Gas customers may need to prepare for higher prices again at the beginning of the year. Reason: The Ministry of Finance wants to re-introduce high VAT on natural gas sooner than expected.
Gas prices for private households will rise by around 11 percent in January if providers fully pass this on, according to calculations by comparison portal Verivox.
Higher costs for the consumer
For a sample household of four, this means additional costs of an average of 270 euros per year. Experts warn that this will hit gas customers hard in the middle of the heating season.
Due to suddenly sky-high prices following Russia’s attack on Ukraine, the federal government introduced gas and district heating tax cuts last year. The lower VAT rate, originally 7 percent instead of 19 percent, was supposed to be valid until March 2024.
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According to Finance Minister Christian Lindner (FDP), the aid measure is scheduled to expire at the end of the year, according to the first report of the “Frankfurter Allgemeine Zeitung”. The abbreviation has not been decided yet. However, this must come to the table during the budget discussions in the Bundestag at the latest.
Why does the crisis measure expire earlier?
“The price peaks caused by the crisis in the gas markets have now diminished,” Lindner’s ministry said. From the beginning, the tax cut was only intended as a short-term measure, never a permanent one. It may be terminated early due to the gas price falling faster than expected in 2022.
This is good news for the federal government because the reduced VAT meant the state had less revenue. Initially, costs were expected to be around 11.3 billion euros. Federal, state and local governments are expected to save €2.1 billion due to early termination, according to the Ministry of Finance. According to the ministry, this will create “room for maneuver for public budgets”.
What does this mean for consumers?
Whatever amount the state saves, gas customers have to pay more, affecting many private households. According to the energy industry association BDEW, almost half of the 43 million apartments and detached houses were heated by natural gas in 2022. Residents should now expect a price increase of around 11 percent on average, according to Verivox.
- for one person four headed family Using 20,000 kilowatt hours of gas will mean an additional cost of 270 euros per year. If you do not have a gas contract and use the basic supply, the price increase goes up to 331 euros.
- A couple According to Verivox, those who consume 12 thousand kilowatt-hours must pay an average of 170 euros and 209 euros for basic services.
- singles With a consumption of 5,000 kilowatt-hours you should expect an average cost increase of 71 euros (basic supply: 87 euros).
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According to Verivox, eliminating the two surcharges (the control energy surcharge and the conversion surcharge) would not offset the additional costs. Additionally, since this status is not automatically transferred, most customers only benefit when they change their contract.
I am Ben Stock, a highly experienced professional with over 7 years of experience in the news industry. I specialize in market section writing and have published numerous high-quality articles on various topics under my name. My passion for journalism has helped me to develop an in-depth understanding of the industry, enabling me to stay up-to-date on all the latest trends and developments.