Berlin Consumers and companies are suffering more and more from the consequences of the Ukraine war. The federal government now wants to react to this. The traffic light is working “under high pressure” on new economic aid, the Handelsblatt learned from government circles.
The coalition is considering responding to both rising energy prices and disrupted supply chains. “Fast and unbureaucratic hardship regulations are needed,” said Martin Wansleben, General Manager of the Association of Chambers of Industry and Commerce (DIHK).
The federal government is examining whether to set up a protection shield for Russia. This could include compensation payments or direct aid. This was confirmed by several government officials. In addition, simplified access to short-time work benefits could be extended. A separate aid package is also being worked on for the battered energy industry.
At the same time, calls for measures to counter high energy prices are increasing. Lower Saxony’s Prime Minister Stephan Weil (SPD) speaks out in the Handelsblatt for a temporary reduction in VAT on energy.
Industry calls for help
A reduction in VAT on energy has also been discussed in the federal government for some time. The Union-led states of North Rhine-Westphalia and Saarland have also launched a Federal Council initiative.
According to this, the electricity tax for private households and for the economy is to be reduced to the European minimum in 2022. They want to “make a substantial reduction in the tax rates on heating oil, natural gas, diesel and petrol” and at least temporarily introduce a reduced tax rate on natural gas, electricity and district heating.
“There has to be something to relieve the pressure, from me cash checks like in France,” said Saarland’s Prime Minister Tobias Hans (CDU) to the Handelsblatt. In France, neighboring France, there will be a discount of 15 cents per liter of fuel from April.
Federal Finance Minister Christian Lindner (FDP) apparently has something similar in mind. According to government circles, there should be a temporary tank discount based on the French model. The “Bild” newspaper had previously reported that Lindner was planning a discount that could amount to 20 cents per liter. This should be granted directly when refueling. The petrol station owner should then later settle it with the tax authorities.
From the point of view of the proponents, such a construct would have advantages: It could be implemented more quickly than, for example, reducing taxes on petrol and diesel. In addition, companies would be directly relieved. For companies, on the other hand, VAT is often just a transitory item.
However, so far it has been a proposal from Lindner, and there has not yet been a decision by the coalition. Economics Minister Robert Habeck (Greens) was cautious on Sunday evening.
It is clear, however, that the traffic light will follow up on the relief of almost 16 billion euros that has already been decided. SPD politicians have also spoken out in favor of further measures in view of the rising energy prices. And Habeck also announced further relief: “Extremely high heating costs, extremely high electricity prices, extremely high fuel prices put a strain on households, and the lower the income, the more. The federal government will therefore launch another relief package.”
At the same time, talks are being held in the coalition about further support for companies, such as the protective shield based on the Corona model. The energy industry in particular is suffering from the high prices. But many industrial companies are also calling for help.
Companies from energy-intensive sectors such as metal, glass, paper and chemicals are sometimes confronted with a multiplication of their electricity and gas bills. A few companies have already suspended their production. A wave of bankruptcies is feared in the sectors.
Authority for exports “immeasurably overloaded”
Medium-sized companies in particular are often not in a position to absorb the rising costs, nor are material delivery failures. The sanctions are also causing problems and are not just a direct burden on business.
Industry circles report that the Federal Office of Economics and Export Control (BAFA), which is responsible for export controls, is currently overburdened. The authority did not respond to a query about this at the time of going to press.
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How exactly the protective shield for the economy could be designed depends on the EU Commission’s state aid framework, according to government circles. On Thursday, the Commission sent out a first proposal to relax state aid law in order to facilitate state aid. The Member States now have the opportunity to consider what is feasible under these conditions.
In the talks with Habeck and Lindner and their officials, industry made a number of suggestions. DIHK General Manager Wansleben emphasizes that there are restrictions that go far beyond sanctions and energy prices.
If, for example, banks and logistics companies turn their backs on Russia, many of the business partners will get into trouble. “We also need legally secure and pragmatic solutions for this,” said Wansleben.
With regard to energy prices, he demands: “German companies that are struggling to survive with these enormous challenges or have to reposition themselves in global competition urgently need support from their own politicians in Berlin and Brussels.”
The Association of the Chemical Industry (VCI) specifically demands financial bridging aid from the federal government “to avoid a wave of insolvencies”. Companies should benefit from the aid if they are affected by rising energy costs, sanctions or failures in the supply chain through no fault of their own. In addition, the VCI proposes direct financial support for companies purchasing gas.
Negative tax proposed as an auxiliary tool
The director of the employer-related Institute of German Economics (IW), Michael Hüther, also suggests a “negative corporate tax”, whereby the tax advance payments made for 2021 would be reduced.
De facto, these are financial subsidies from the state, like the Corona aid, but via a different route. “That would be faster, would not require any applications or lengthy checks, but would be processed quickly by the tax authorities,” Hüther told the Handelsblatt.
Many companies from energy-intensive industries fear for their business model.
(Photo: dpa/Getty Images (M))
Other economists question the federal government’s considerations. Oliver Holtemöller, Vice President of the Halle Institute for Economic Research (IWH), said: “It is not the task of economic policy to insure companies against all possible risks.”
Targeted aid such as short-time work benefits make sense. But unlike in the corona crisis, no severe recession is now to be expected in Germany.
Therefore, it is not the time for broad-based grants, says Holtemöller: “How should the Ministry of Economics assess which companies are now in distress through no fault of their own and where it is only a matter of free-rider effects?”
There is still a need for clarification in the federal government. The Ministry of Economics and Finance must agree on this. The situation is “but serious,” said a government official.
Economics Minister Habeck has officially announced a loan program from the state KfW development bank for companies affected by the Russian sanctions. The program is to start “immediately”, an exact date is not yet known.
The loan program can also only start if the EU Commission relaxes the state aid framework. However, it is considered likely that this will not be a problem with loans.
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