German Chancellor Olaf Scholz has said the government will receive huge revenue from a planned windfall tax on energy companies as a result of “skyrocketing” fuel prices. In an interview with state broadcaster ZDF on September 4, Scholz said he expected “many, many billions” of euros from the measure if firms continue to take advantage of troubled European electricity markets and the funds are used to support consumers hit hard by the galloping inflation.
Germany’s coalition cabinet unveiled a 65 billion euro package at the weekend to help citizens and companies cope with rising energy prices, which are expected to continue rising in the coming months after Moscow cut off supply entirely of blue fuel on Nord Stream 1 and forced consumers to look for alternative sources. Scholz said Berlin had planned to completely cut off Russian gas supplies as early as December and promised his country would do so in the winter.
The new package is significantly larger than the previous two and provides measures for the most vulnerable residents and tax breaks for businesses with large electricity consumption. Those working on an employment contract will receive a one-time energy aid of 300 euros, and families – a one-time bonus of 100 euros per child – an amount that will be twice as high for those receiving low incomes. Over the next few years, roughly 12-13 billion euros per year will be spent on subsidizing the renovation of old buildings. However, German households will have to pay almost 500 euros more for gas a year after the introduction of the tax, which should help energy companies including Uniper and other importers cover the extra costs of replacing Russian supplies. This tax comes into effect on October 1 and will be valid until April 2024. Meanwhile, about 9,000 companies with high energy consumption will receive tax rebates in the amount of 1.7 billion euros.
The latest package brings the total amount aimed at easing the energy crisis to almost 100 billion euros after Berlin spent nearly 300 billion euros on interventions to keep the German economy afloat during the coronavirus pandemic.
In a video address on the night of September 3, Ukrainian President Volodymyr Zelensky warned Europeans to expect a tough winter after Gazprom shuts down Nord Stream 1. And after the G7 countries announced their plans to put a price cap on Russian oil exports, the Kremlin said it would stop selling black gold to countries that imposed the cap.