Relief packages, fuel rebates, excess profit absorption: to what extent can the state protect us in crises?

Source: Energy & Management Powernews, November 10 2022

The three relief packages and the price brakes of the federal government will blow the credit framework of the "double whammy". This calculated the Ifo Institute and drew a conclusion.

The Ifo Institute in Munich has already calculated together what the three relief packages of the Federal Government decided so far will cost in the years 2022, 2023 and 2024. The result: 135 billion euros. That is 3.8 percent of the economic output of the year 2021.

"This sum does not include the gas and electricity price brake, which is estimated at another 90 billion euros and which has not yet been approved by the Bundestag," emphasized Ifo tax estimator Max Lay. Thus, the 200 billion euros of additional credits of the "double whammy" approved by the Bundestag are already more than exhausted.

This year, the costs due to the three packages amount to 33.3 billion euros, in the coming 49.0 billion and 2024 even 52.2 billion euros. "The real income losses due to higher energy prices must be borne by society," warned co-author Andreas Peichl. "The state cannot prevent these losses, it can only redistribute them," he indicated.

Ifo calls for targeted aid and savings incentives

If the state tried to shield the entire population, it could provide fewer public goods or would have to levy higher taxes in the future. "State support should follow two rules:

• energy-saving incentives must be maintained across the board,
• and aid should only be given to households that are particularly affected,
• the Ifo Institute demanded.

And so the projected total costs in 2022 are composed:

• "The biggest chunk this year is the net 10.4 billion for the energy money of employees," broke down Lay.
• That was followed by 6 billion for the energy money of pensioners,
• then 3.1 billion for the temporary reduction of the energy tax,
• 2.7 billion euros for the increase in the basic tax-free allowance,
• 2.5 billion for the 9-Euro-Ticket
• and 2.0 billion euros for the reduction of the sales tax on gas.

In the coming year, the sales tax reduction on gas would even be 6.5 billion euros. The Publication of the Ifo Institute "Costs of the relief packages" is available on the Internet.

Author: Susanne Harmsen