The big country comparison: From “price freezes” to heat checks: This is how our neighbors relieve their citizens
European governments invest billions of euros in taxpayers’ money to provide financial relief to their citizens in need. Many are more creative than Germans. From frozen energy prices to additional taxes to heat checks for war profiteers, everything is included.
The World Bank is clear: it expects European natural gas prices to double in 2022 compared to 2021, while coal prices are expected to rise by 80 percent. The bank’s vice president, Indermit Gill, summarizes in his latest report: “We are experiencing the biggest commodity shock since the 1970s. These developments increase the risk of “inflation”, ie runaway inflation without economic growth.
And then Gill writes something in the book Politicians’ Family: “Politicians should seize every opportunity to spur economic growth at home.”
Exciting, but just no time?
So what is being done to relieve the burden on citizens? Skyrocketing energy prices are becoming a serious problem across Europe. There is a risk of power failure in many households. They can no longer pay their bills. But energy-intensive companies are also struggling to survive. Governments combat this in various ways. They reduce VAT on energy, grant fuel credits, increase child benefits or enforce tax exemptions for energy-saving measures. There is little disagreement about these devices.
The situation is different with the controversial electricity price cap that the European Union allowed Spain and Portugal on June 9th. The upper price limit for gas to generate electricity will initially be EUR 40 per megawatt hour. In the next twelve months, it should be around 50 euros on average. In May, the price per megawatt hour was almost twice as high.
Around 40 percent of private households and 70 percent of industrial customers would be relieved, said the Spanish Minister for Ecological Change, Teresa Ribera. This measure offers protection for consumers, companies and large-scale industry. For this purpose, government funds of more than eight billion euros are to flow to energy companies. Germany and the Netherlands rejected this market intervention.
How Europe reacts to rising energy prices varies greatly. Here is the overview:
Germany: nine-euro ticket, energy flat rate, heating subsidy
The energy tax on motor fuels will be reduced to the European minimum by August. There is also a ticket for public transport for nine euros. The distance allowance and employee allowance have been increased for long-distance passengers, as has the basic income tax allowance. Employees, the self-employed and tradespeople receive a one-off energy fee of 300 euros. A total of 21,000 people benefit from the heating subsidy. The EEG surcharge will be abolished from 2023.
France: Gas prices frozen at October 2021 levels
Gas prices have been frozen at October 2021 levels. Electricity prices can be increased by up to four percent, and low earners already receive a one-off government payment of 100 euros. From April 1st, motorists in France will receive a fuel discount of 15 cents per liter of fuel. Energy-intensive companies, where energy bills account for at least three percent of sales and are at risk of losses, should seek support.
Additional state loan guarantees should also help the companies. Those who get into serious difficulties as a result of energy costs or the consequences of the Ukraine war can avoid paying taxes and social security contributions.
Great Britain: 460 euros off electricity bills
The government will pay each household 460 euros from their electricity bill from October. Most families should get a one-time exemption from local tax of 170 euros. The income limit above which citizens have to pay income tax and social security contributions will be raised to around 3,500 euros. In addition, homeowners no longer have to pay VAT for energy-saving investments. The mineral oil tax was initially reduced by up to six cents per liter for one year.
Italy: Social bonus on electricity and heating costs for millions of families
5.2 million households receive subsidies for electricity and heating costs as a social bonus. Producers, importers and intermediaries of electricity, gas and oil will temporarily pay an additional ten percent on their profits.
Petrol and diesel prices have been reduced. Businesses that are exclusively energy or gas intensive are to receive a 25 percent tax credit in the second quarter of 2022; Tax credit of 20 percent on gas and 12 percent on other energy costs for all other businesses. May and June bills from energy suppliers can be deferred in 24 monthly installments. It is to be financed, among other things, by a special tax of 25 percent for energy companies on excessive profits.
Spain: Utilities are not allowed to turn off electricity if the bill is not paid
In early 2021, the government reduced VAT on electricity from 21 to 10 percent. The 7 percent tax on electricity generation was suspended entirely and the electricity tax was cut to 0.5 percent from 5.1 percent in September.
Network charges will also be reduced. Low-income households benefit from 25 and 70 percent discounts on electricity prices. In addition, utilities are not allowed to turn off the electricity for ten months if bills are not paid. Until the end of June, 20 cents per liter of petrol and diesel will be refunded at petrol stations.
Greece: An average family saves 50 to 60 euros a month
With consumption-based subsidies for electricity and gas, an average family saves 50 to 60 euros a month. Natural gas customers can apply for a monthly subsidy of 20 euros per megawatt hour. At Easter, the government transferred a special child benefit payment to its citizens to compensate for inflation.
A big problem are those households that cannot pay their electricity bills even though they have everything. The EU-independent initiative aims to reduce energy prices from Greek household electricity bills. As a result, the government wants to tax 90 percent on excess profits from energy companies during the energy crisis from July.
Austria: 4 billion euros for various aid programs
Here the gas and electricity taxes for private households and small businesses are to be reduced. Green electricity flat rate and levy suspended. There is also an adjustment for inflation and energy costs. A total of around 4 billion euros will be invested in various aid programs for citizens, companies and businesses.
Belgium: Each family must receive a one-time payment of 100 euros
VAT on electricity and gas was temporarily reduced from 21 to 6 percent. Each household should receive a one-off payment of 100 euros. Low-income households use a special tariff for energy prices until September. Taxes on diesel and petrol fell to 17.5 cents per liter.
Netherlands: VAT on energy reduced from 21 to 9 percent
There, the VAT on energy was reduced from 21 to 9 percent and the taxes on petrol and diesel by 21 percent. Families with very low incomes are to receive a one-time subsidy of 800 euros each.
Denmark: Tax-free heat check for 800 euros
Low-income households can get a tax-free warming check for the equivalent of around 800 euros. This equates to a subsidy of US$288 million for the approximately 419,000 families most affected.
Sweden: Car owners receive a one-off payment
The mineral oil tax is to drop to the lowest level in the EU from June 1st to October 31st. With a one-time payment of 94 to 141 euros and an increased housing allowance for families with children, car owners should be relieved of rising ridiculous prices.
Norway: The government took over 50 percent of the net price per kilowatt
Up to a monthly consumption of 5,000 kilowatt hours, the state has paid 50 percent of the net kilowatt hours since March. According to government information, this means support for electricity customers of the equivalent of around 500 million euros.
Poland: Poles no longer pay taxes on petrol and food
The government has lowered its tax requirements on electricity, hot oil and gasoline and eliminated them entirely on gas and groceries. This should bring relief to citizens by 5.5 billion euros within six months.
Czech Republic: Gasoline and diesel no longer have to be mixed with biofuels
The road traffic tax has been abolished for cars, buses and trucks up to twelve tons. Gasoline and diesel no longer have to be mixed with biofuels.
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