Germany's electricity tax cut stalls as coalition has no funding for 5.4 billion euros

Merz holds to the cut

Chancellor Friedrich Merz is refusing to drop the plan to cut the electricity tax (Stromsteuer) for everyone, including private households and small businesses. Speaking on the sidelines of an informal EU summit in Dublin, he said he was holding to the aim of lowering the tax to the European minimum. He expects the coalition leaders to discuss the question again at the coalition committee on Tuesday, 17 November. The cut is not planned in the federal budget for next year, and its financing remains open.

“I am holding to my goal of cutting the electricity tax to the European minimum, and doing so from next year in full.”

The 5.4 billion euro gap

The cut for private households and small businesses is put at about 5.4 billion euros a year. Industry, manufacturing and agriculture and forestry already pay a reduced rate, down from 2.05 to 0.05 cents per kilowatt hour. Berliner Zeitung reports that the tax still brings the federal government almost six billion euros a year, so a further cut would leave more than five billion euros missing. Finance Minister Lars Klingbeil said he is always open to a cut but wants counter-financing that is solid and serious, and that the government will keep debating it.

Who would save what

Verivox calculations cited in the coverage put the monthly saving for a three-person household using 4,000 kWh a year at 7.75 euros. A couple using 2,800 kWh could expect about 5 euros a month, and a single-person household using 1,500 kWh about 3 euros. SPD parliamentary group leader Matthias Miersch put the relief for an average family between 6 and 8 euros a month and called the sum manageable. He added that the cut still costs the state a great deal of money.

Single household (1,500 kWh a year)3

Couple (2,800 kWh a year)5

Three-person household (4,000 kWh a year)7.75

Single household (1,500 kWh a year)

3 euros per month

Couple (2,800 kWh a year)

5 euros per month

Three-person household (4,000 kWh a year)

7.75 euros per month

Data from the article text

A coalition row and the Union's anger

On Wednesday evening, 11 November, the Union and SPD announced that they had found no way to finance the cut. The CDU/CSU parliamentary group then met for more than three hours, and reports say the word "disaster" was used and the session ended in a real blow-up. CDU general secretary Franziska Hoppermann attacked Klingbeil directly.

“The finance minister is creative when it comes to inventing taxes. But he ducks away when it comes to concrete relief for everyone.”

Hoppermann added that Klingbeil had promised the cut in the coalition agreement and asked what that word was still worth. Merz was not at the meeting, as he was celebrating his 71st birthday with his wife and daughter. Hamburg's CDU leader Dennis Thering said it was hard to explain that the cut had been promised a second time and still did not come.

States split along party lines

The minister-presidents of the federal states had called on 22 October for budget room to be used quickly for a cut for everyone. Schleswig-Holstein's Minister-President Daniel Günther (CDU) repeats that position.

“Electricity must become permanently more affordable for everyone.”

SPD state leaders have backed Klingbeil. Bremen's mayor Andreas Bovenschulte told Welt he would have supported a cut but that it needed serious counter-financing, such as a plastics, sugar or windfall tax, and that without it the cut is not affordable. Hamburg finance senator Andreas Dressel, also SPD, argued similarly. Hamburg Greens environment senator Katharina Fegebank said postponing the cut for everyone once again creates frustration and uncertainty.

What comes next

Union member of the Bundestag Paul Ziemiak told ARD Tagesthemen that the cut is agreed in the coalition agreement and that what is promised must be kept. He said solutions can be found in this budget if everyone wants them, and that Klingbeil should work on it with the budget negotiators of both parties. The draft federal budget for next year is ready for the parliamentary vote, but it remains unclear whether the cut can be financed.