Although the third relief package has not yet been paid out, economists and associations are already calling for the fourth all-round blow. Above all, they lack assistance for working people with low incomes and for pensioners. These measures could come.
The federal government is allowing the third relief package to cost 65 billion euros – and it is likely to be too little. While it will take until January before decisions such as citizen benefits, increased housing benefits and the recalculation of income tax take effect, prices continue to rise. For October alone, 603 gas suppliers and 119 electricity suppliers announced price increases. While electricity prices were already 44 percent higher in September compared to the previous year, natural gas prices are even 232 percent higher. And now the heating season begins, ie the time of year when 70 to 80 percent of the gas consumption of a normal household occurs.
“A one-off relief is not enough,” says Michaela Engelmeier, chairwoman of the Social Association Germany. She specifically means the 300 euros that pensioners will receive this winter. But your criticism could also be extended to the 300 euros in energy money for employees and the 200 euros for students. Even the heating subsidy for housing benefit recipients, at least 415 euros, hardly covers the additional costs.
Engelmeier is not the only one calling for more state aid. “You will have to make adjustments again,” says Claudia Kemfert in the MDR podcast. She heads the energy department at the German Institute for Economic Research (DIW) in Berlin. There are also corresponding voices in politics, even in the traffic light coalition. Bundestag President Bärbel Bas (SPD) recently said in an interview with the Bild am Sonntag: “In order to cushion the worst of it, especially for people with low incomes, we must be prepared to do it again if the crises progress.”
The third relief package relieves the recipients of social benefits the most. They benefit, for example, from the introduction of the citizen’s allowance and the expansion of the housing allowance together with the corresponding flat-rate energy costs. Other low-income groups receive little or no one-off assistance. These include, for example, the one-off payments for students and pensioners, which in principle only make up for a failure in the second relief package, where these two groups were forgotten. Other measures are good, but do not help against high energy prices: 18 euros more child benefit does not save a family.
In addition, households are already suffering from the high energy costs, but will only be relieved from citizen income, electricity price brakes and a possible successor to the 9-euro ticket from January.
But what measures should help in a fourth package? An overview.
Both the Social Association Germany and the left are demanding a so-called inflation money. This means a monthly payment to people with low incomes. The SoVD wants 100 euros per person and month for all people who receive basic security. That would be a lot of pensioners, but also all the people who will receive the new citizen’s income.
The left demands 125 euros per household plus 50 euros for each additional household member. A family of four would then get 275 euros per month, for example. She wants to pay it out to all people with low and middle incomes. The party does not name exact limits.
If the poorest 30 percent of German households received the inflation money, the monthly costs would be around 2.4 billion euros.
From January there should already be an electricity price brake. It is not yet officially known what exactly that could look like, but Federal Minister of Justice Marco Buschmann (FDP) tweeted that the plans would limit electricity prices to 30 cents per kWh and reduce network charges by 2 cents per kWh – but only on basic consumption of a household. It is currently 1,400 kWh per year for single people, and 3,100 kWh for a family of four.
This brake would relieve households significantly. The comparison portal Check24 calculated that single households would save 197 euros compared to today’s prices, and families 454 euros, provided they consume an average amount of electricity.
But as shown above, gas prices are rising much faster than electricity prices and are therefore becoming the biggest problem, especially now in winter. That’s why the Association of Towns and Municipalities is calling for a gas price brake: “We need the bazooka now,” said Gerd Landsberg, Managing Director of the German Association of Towns and Municipalities (DStGB) in an interview with the Neue Osnabrücker Zeitung. The NRW state association of the SPD and Matthias Mirsch, deputy chairman of the SPD parliamentary group, are also demanding something similar.
However, it is unclear at which limit the gas price should be curbed. If, as with electricity, a value around 30 percent below the current average price was chosen, that would be 15 cents per kWh. The costs for such a gas price brake would be enormous. Although Germany will probably consume 20 percent less natural gas this year than in the previous year, it is still more than 800 terawatt hours. Reducing the price for this by just 6.9 cents per kWh adds up to 55.5 billion euros.
However: The costs are somewhat lower if, as with electricity, only basic consumption is subsidised. In addition, the savings for households would be enormous. A single household would save around 336 euros, a family of four around 856 euros per year.
In addition to the two major costs of inflationary money and the brake on gas prices, there are many other starting points. The successor to the 9-euro ticket is planned in the third relief package, but has not yet been worked out. The federal government wants to help here with 1.5 billion euros per year. Environmental organizations such as environmental aid are demanding a 365-euro ticket, i.e. one euro per day per year. The costs for this would be around four billion euros, which the federal government should bear alone.
The Social Association Germany also calls for a further increase in citizen income. According to Engelmeier, 502 euros per month could only be an intermediate step. The increase of 50 euros compared to Hartz IV has already been eaten up by inflation. She sees 650 euros as the minimum. The basic security for pensioners and people who can no longer work should also increase accordingly.
The costs alone for the measures presented here would be enormous. All in all, the state would have to pay around 90 billion euros for this. Something like this has to be funded. The only revenue the state has for this would be taxes. So do those who are to be relieved also have to help finance the relief in the end – as is currently the case with the gas surcharge?
No, say those who are demanding further relief. Instead, those who still have enough money despite inflation and the energy crisis – or who have even become richer as a result – should be asked to pay more.
There are two groups: One is companies. In the second quarter, the 40 Dax companies alone generated higher sales than ever before and a profit of 39.6 billion euros. Already in the first quarter it had made more money than ever before in the history of the stock market index with 52.4 billion euros. This is reported by the management consultancy EY. The Handelsblatt has meanwhile calculated that 15 Dax companies will post record profits this year. The traffic light coalition only wants to skim off a small part of this. “Accidental profits” from energy companies should be taxed separately. The potential would be greater.
The same applies to private wealth. With the reform of the income tax calculation, not only low and normal earners will be relieved from next year, but also people with high incomes. “Those at the top, and I’m one of them, don’t need this money,” says Bas. While a low earner with 2500 euros gross per month will have just 6 euros more net in his pocket from January, a high earner with 5000 euros gross per month will have an advantage of 31 euros. In percentage terms, that’s 2.5 times as much. Top earners with 7,500 euros gross per month are even relieved by the state by 63 euros, which is even more than high earners in percentage terms.
Here, too, there would be opportunities for the state to raise more money. If all households were relieved at the level of low earners, that would bring in an additional 11.5 billion euros. According to IW Köln, a further 8.9 billion euros could be generated by reforming the inheritance tax, while a wealth levy, such as the SPD and Greens called for during the election campaign, could bring in up to 10 billion euros per year, according to the DIW.
This shows that there is potential to finance a 90 billion euro relief package without burdening people with low incomes or small and medium-sized businesses.
Follow the author on Facebook
Follow the author on Twitter