Berlin The list of measures that the federal government has agreed on as part of a third relief package is long. It ranges from direct payments for pensioners and students to an electricity price brake and the extension of aid for companies to skimming off random profits. But how useful are the projects? Economics Monika Schnitzer talks about this in an interview.
Ms Schnitzer, is the federal government’s new relief package, with a volume of 65 billion euros, as huge as it seems?
The package is big. But it contains at least as many ambiguities as relief measures. This applies to the design of the plans, but above all to the financing.
Finance Minister Christian Lindner has announced that the government can finance all measures within the framework of the planned budgets and in compliance with the debt brake in the coming year. Do you think so?
That’s a bold goal. According to Lindner, 32 billion euros should come from the federal budget. And the rest? That is largely unclear. The traffic light has nothing but goals formulated, but hardly shows the way to get there. The principle of hope applies here. Lindner has ruled out a further suspension of the debt brake and a supplementary budget. But I still don’t have the imagination how to do that if you really want to implement all the relief.
A large part of the money should come from the skimming of random profits in the coffers. Energy companies that generate electricity from renewables or coal are making huge profits due to high gas prices. This should then be used to finance an electricity price brake for a certain basic household consumption. Does this make sense?
In principle, this is a reasonable approach. However, the considerations for such a reform of the electricity market are still in their infancy. There are many good ideas, but no agreement on how to implement them, let alone a concrete plan. Planning an immense double-digit billion amount on this basis seems courageous. In addition, the random profits on the electricity market that are to be skimmed off vary greatly depending on energy prices. And it is currently difficult to predict.
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Can the electricity price brake be implemented quickly enough at all?
At least that’s possible. The government wants to use the infrastructure of the abolished EEG surcharge to be able to move the funds. That should speed up implementation. But of course a lot depends on how quick the EU Commission is. Brussels wants to reform the European electricity market as a whole and skim off chance profits.
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If Brussels isn’t fast enough, you’ll just push ahead alone, the traffic light announced.
This is tricky. Spain has already introduced an electricity price cap on its own. As a result, foreign countries used the cheap electricity there. We have to prevent that. Spain has introduced a general cap, not just one for basic needs. But the Spanish effect could also occur in Germany via detours.
Lower and middle income groups in particular suffer from the high energy prices. Are they getting enough help now?
It was urgently necessary to top up for pensioners and students. They had been forgotten in the past relief packages. Overall, however, it is now difficult to say whether the package is on target. Too many points are still open for this, such as what the amount of basic consumption will be based on, for which the electricity price brake should apply. But what is clear is that there are two large open flanks in the package.
Which?
Firstly, the consumers of gas: None of the measures announced specifically relate to this group, which has to accept by far the heaviest price burdens. We often talk about a quadrupling of prices. For them there is only the previously announced reduction in VAT on gas. But that will not be enough by far.
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A commission of experts is now to examine whether a price cap for a basic quantity of gas is also an option.
This may take a while, as the households concerned will not be able to heat more cheaply just from the announcement. The group of recipients of the housing allowance is to be expanded from half a million to two million citizens and supplemented by a flat-rate heating fee. But that won’t be enough when you look at the second open flank.
Which would be?
The lower-middle class, earning just enough to be unprofitable from raising unemployment rates and expanding housing benefits, but who also have no savings to absorb rising energy prices. This group benefits from some measures that are poured out with the watering can, such as the electricity price brake and the tax cut. But the government hasn’t solved the problem of not being able to transfer money directly to these people.
After all, the midi job limit will be raised, up to an income of 2000 euros per month, employees do not have to pay any social security contributions. That’s something, isn’t it?
I don’t know if that will do that much. Some second earners from well-heeled households also fall under this limit. And actually it would make more sense not to make it more difficult but to make it easier to get over the midi job limit. The increase now creates further false incentives to stay in part-time work. This is particularly problematic in view of the expansion of women’s employment, and it also cements the low-wage sector.
Middle incomes will at least benefit from the reduction in “cold progression”. Finance Minister Lindner has pushed through to shifting the limits of income tax in order to avoid creeping tax increases due to inflation.
The middle and lower income earners have significantly less of this than the upper, who are relieved more in absolute amounts. In principle, it is of course correct to reduce the cold progression. But one has to ask whether this is the right time. It is strange that the reduction in progression is reflected in a relief package.
Why?
Only those who are also burdened need to be relieved. The dismantling of the cold progression relieves those with an income of more than 6000 euros the most. But they can cope well with the high energy prices. Progressive dismantling prevents more relief for those who really need it, because it takes away the financial scope for other measures.
Ms Schnitzer, thank you very much for the interview.
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