Berlin – Germany is preparing another package of measures to protect consumers and businesses from the effects of soaring inflation, worth 65 billion euros (1.6 trillion crowns). This was reported by the Reuters agency with reference to a document published by the German government. Chancellor Olaf Scholz announced afterwards at a press conference that he will use a tax on windfall profits to lower the prices of gas, oil and coal for consumers.
The measures, which include proposals to extend discounts on public transport and tax breaks amounting to 1.7 billion euros (41.7 billion crowns) for 9,000 energy-intensive businesses, were agreed by the three parties of the government coalition this morning after 18 hours of negotiations. “It’s the biggest of the three packages so far,” Scholz said at a news conference. The first two packages had a total value of 30 billion euros.
“Due to the rapid rise in energy prices, rapid and adequate assistance to citizens and businesses is necessary,” according to the AFP news agency, in a government document. The aid package also includes a check for students and pensioners and an increase in housing allowance, according to the document. “It’s about getting our country through this crisis safely,” Scholz said, adding that many people are worried about the current situation. “We take these concerns very seriously,” the chancellor said.
Inflation is mainly driven up by high energy prices, which are not falling due to energy uncertainty related to the Russian invasion of Ukraine.
The German government will therefore use taxes on windfalls arising from the energy market to lower gas, oil and coal prices for end consumers, Scholz announced. “The first task is to use such windfalls to relieve citizens,” he said. He added that the possibility of eliminating unexpected incomes will also be discussed at the EU level, in particular, it will be about setting the upper limit for revenues, or prizes for companies that have extraordinary profits.
According to the chancellor, Germany “will be able to handle this winter” and secure energy supplies despite the drying up of Russian gas supplies, on which its economy is heavily dependent. “Russia is no longer a reliable supplier of energy (…) The federal government has been preparing for this possibility since the beginning of the year,” Scholz told reporters, stressing that thanks to the diversification of supply sources and the replenishment of gas reserves, the country is able to cope with a longer shutdown of the Nord Stream gas pipeline 1.
According to Scholz, Russian President Vladimir Putin and his offensive war against Ukraine are responsible for the current difficult situation that Europe is experiencing. The German Chancellor met with Ukrainian Prime Minister Denys Shmyhal today, energy policy was also on the agenda.
Due to high energy prices and the rising cost of living, Germany has already taken a number of measures, including lump sums, to relieve people. Among the most popular steps were the temporary reduction of fuel tax or the introduction of a monthly all-German ticket for regional and city transport for nine euros (CZK 220). The two reliefs ended at the end of August.
EU Germany economy inflation energy Scholz