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ENERGY

Will Germany set a gas price cap?

As energy costs rise further, more German politicians are coming out in favour of a cap on gas prices - and the government is reportedly looking into the matter.

Will Germany set a gas price cap?
A person turns the knob on their heating device (Photo by Ina FASSBENDER / AFP)

What’s happening?

With electricity bills having doubled in some cases and German inflation seeing post-war record highs of 7-8 percent each month, the German government has been making a lot of money available to help give some relief to people struggling with their bills.

Some of this money is designed to specifically target the financial pressure brought on by the rising price of natural gas – which around half of German households use for heat. Gas also supplies around a quarter of German electricity, but has nearly quintupled in price.

The government’s relief measures include one-off payments and a cut on the VAT put on natural gas from 19 percent to 7 percent.

READ ALSO: KEY POINTS: Everything Germany is doing to help relieve rising energy costs

But more politicians and experts are saying that’s not enough, and are calling for the federal government to pass a Gaspreisdeckel – a cap on the price of gas.

The Left Party has been advocating such a cap for months. But this week, leader of the conservative opposition Christian Social Union (CSU) Markus Söder, whose Bavarian party is sister to the Christian Democrats in the rest of the country, also called for a gas price cap.

“We are experiencing an unprecedented increase in the price of gas and it is essential to prevent normal earners from becoming low earners,” he said.

CSU Leader and Bavarian Premier Markus Söder is in favour of a gas price cap. Photo: picture alliance/dpa | Nicolas Armer

He says the federal traffic light coalition should also abandon plans for its gas levy, which passes on some of the higher costs of importing gas to consumers, and to suspend the national debt brake. That would allow more government money to be spent on relief.

READ ALSO: Germany to push ahead with gas levy plans

Alexander Dobrindt, who leads the CSU in the Bundestag, says a gas price cap should cover 75 percent of consumption in private households, with the remaining 25 percent determined by market rates. Dobrindt argues that allowing the last quarter to fluctuate would incentivise people to still save energy.

Who else wants it?

Söder’s CDU colleagues in the Bundestag say they’re also in favour of a short-term cap on gas prices to get through the winter.

Berlin Mayor Franziska Giffey also called for a cap this week.

She says she’s in favour of a Energiepreisdeckel – or a cap on electricity prices that goes beyond simply gas prices, and intends to take the matter to a meeting the 16 federal state bosses will have with Chancellor Olaf Scholz and his federal government on September 28th.

READ ALSO: German word of the day: Deckel

“The government needs to put an energy price cap in and give people the security they need to sleep peacefully again,” said Giffey, who unlike opposition politicians like Söder, comes from the same Social Democratic Party as Chancellor Olaf Scholz.

Berlin Mayor Franziska Giffey, from Olaf Scholz’s Social Democrats, wants an electricity price cap for both households and businesses. Photo: picture alliance/dpa | Wolfgang Kumm

She says that businesses threatened by rising costs should also benefit from a cap, alongside private households. She says the national debt brake should be suspended to pay for this.

In an interview with public broadcaster ZDF, economics professor and member of the federal government’s economic experts committee Veronika Grimm also called for a gas price cap, provided it still be set up to give people an incentive to save energy.

The Federal Association of German Housing and Real Estate Companies (GdW) is also calling for a federal gas price cap, warning that many tenants may not be able to pay their utility costs.

READ ALSO: Tenants in Germany need eviction protections during energy crisis, says housing boss

What is the government doing about it?

Energy and Economics Minister Robert Habeck of the Greens ruled out a cap on gas prices earlier this week, but Finance Minister Christian Lindner of the liberal Free Democrats has set up a working group that will look at capping gas prices.

The expert group will examine whether a gas price cap is possible, how it might be put into place, and how such a cap would be paid for, ahead of consultations with the federal state heads next week.

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READER QUESTIONS

Reader question: Why haven’t I received my €300 payment yet in Germany?

Many working people in Germany will have received their energy relief payment by now. But if you haven’t got yours yet, there’s no need to worry, here are some reasons why that could be and what you can do.

Reader question: Why haven’t I received my €300 payment yet in Germany?

The €300 payment – known as the Energiepreispauschale or EPP – is one of the German coalition government’s relief measures intended to help people with rising energy costs. It goes out to everyone who lives and works in Germany, including those in part-time and temporary employment, trainees and students in paid internships as well as freelancers.

READ ALSO: What you need to know about Germany’s €300 energy relief payout

Those who have already received the payment as part of their September pay packet will have had an item on their pay slip marked as sonstiger Bezug (“other remuneration”) or “E” for Einmalbezug (“one-time payment“).

The EPP is subject to payroll tax, so only those who earn below the basic tax-free allowance (that means they don’t earn enough to pay any tax) will benefit from the full amount.

According to the Ministry of Finance, employees will receive on average €193 from the €300 allowance.

However, if the EPP didn‘t appear on your pay slip in September, here are a couple of reasons why that could be:

You have a mini-job

Mini-jobbers need to make clear to their employers that their mini-job is their main means of income, as often a mini-job is carried out alongside another job. If you haven’t received your €300 payment yet it’s best to discuss this with your employer and to confirm that it is your main job in writing.

A waiter carries a tray with used glasses and empty bottles. Photo: picture alliance/dpa | Jonas Walzberg

Your employer is not required to make the payment

There are some cases where the flat-rate energy allowance is not paid out by the employer at all. The Federal Ministry of Finance mentions the following exceptions, for example: if the employer is not required to file income tax returns, or the employee is employed on a short-term basis or is a temporary worker in agriculture and forestry.

In these cases, you have to file an income tax return for 2022 and claim the EPP there.

The payment may come later

The Ministry of Finance says that, if an employer misses the payment “for organisational or accounting reasons,” for example if you started your job in August and the payroll department missed you out, then the payment can be made later.

At the latest, however, it should come when the employer sends the Lohnsteuerbescheinigung (wage tax statement) – which is usually sent in December. In this case, too, it’s advisable to clarify with your employer or the payroll department why you haven’t received the payment yet. 

You work for a small company

Sometimes employers are not obliged to pay out the energy flat rate in September, but can still do so in October. This is the case if the employer submits its payroll tax returns to the tax office on a quarterly rather than monthly. Smaller employers, for example, who pay less than €5,000 in advance wage tax per year, only have to submit the advance wage tax payment once a quarter. This is not due until October 10th, so the employees concerned will not receive the €300 lump sum until October.

What other support will people get from the German government?

On Tuesday, Germany’s 16 state leaders are meeting with Chancellor Olaf Scholz to discuss which measures the €200 billion package announced last week should include.

READ ALSO: Germany to thrash out details of €200 billion energy support package

It’s expected that a Gaspreisdeckel – or a cap on the price of gas households would pay this winter – will soon come into force when the details are worked out, while plans for a cheap follow-up to the popular €9 ticket will also be presented later this month.

Benefit payment recipients will receive a one-off top-up to their existing benefit payments to pay for the higher cost of heating and pensioners will receive a €300 payment on December 1st. They do not have to apply for this, it’ll simply be added to the payments they receive from their pension insurance funds.

READ ALSO: KEY POINTS: Everything Germany is doing to help relieve rising energy costs

A €200 one-off payment is also planned for students, although each federal state may end up paying the amount slightly differently in a process that’s still being defined.

From next year, parents will see an increase in the amount of child benefit (Kindergeld) they receive, up to €237 per month, per child, up to and including the third child.

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