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Berlin – The German coalition government, led by the Union (CDU/CSU) and the SPD, has so far failed to identify the necessary funding for a planned reduction of the electricity tax for all consumers. The initiative, which has been strongly advocated by Chancellor Friedrich Merz (CDU), remains in a precarious position as budget negotiations reach a critical stage.
According to reports from both coalition factions, the search for the required 5.4 billion euros remains ongoing. This amount is necessary to lower the electricity tax to the European minimum level. The issue is expected to be addressed during the upcoming budget reconciliation meeting, where final adjustments to the 2027 federal budget will be made before the Bundestag vote scheduled for late November.
Budget constraints hinder implementation
The federal budget is currently under extreme pressure, and budget planners have struggled to find the necessary fiscal space to accommodate the tax cut. Consequently, it is increasingly unlikely that the relief measure will be implemented by the beginning of the year, as originally desired by Chancellor Merz.
The coalition agreement had initially outlined a goal to reduce the electricity tax to the European minimum. However, due to budgetary constraints, this has thus far only been applied to the manufacturing industry and the agricultural and forestry sectors.
Prioritization and financing challenges
Chancellor Merz has recently placed high priority on the electricity tax reduction, describing it as having “a certain priority over other energy policy measures.” Finance Minister and Vice-Chancellor Lars Klingbeil (SPD) has expressed openness to the plan but emphasized that the current budget lacks the necessary flexibility, urging the Union to propose specific counter-financing measures.
The current German electricity tax, introduced in 1999, stands at 2.05 cents per kilowatt-hour, while the European minimum is 0.1 cents. Lowering the rate to this minimum would result in a difference of 1.95 cents per kilowatt-hour.
Potential impact on households
According to calculations by the comparison portal Verivox, a reduction to the European minimum would provide tangible relief for consumers:
- Three-person household (4,000 kWh/year): Approximately 7.75 euros per month.
- Couple household (2,800 kWh/year): Approximately 5.00 euros per month.
- Single household (1,500 kWh/year): Approximately 3.00 euros per month.
The coalition’s ability to finalize this funding remains a significant hurdle in the final weeks before the 2027 budget is finalized.
Source: dpa
