Merz defends electricity tax: Energy costs remain high!

Merz defends electricity tax: Energy costs remain high!

Chancellor Friedrich Merz (CDU) defended his decision on electricity tax in an Instagram video. The announced reduction was not implemented to the extent originally desired, which sparked widespread criticism. Merz emphasized that it is very important not to burden the future generation with debt. In particular, the Union and the SPD had agreed in the coalition agreement to reduce the electricity tax to the European minimum for all consumers, but the coalition backed away from this agreement due to budgetary constraints. Finance Minister Lars Klingbeil (SPD) made it clear in the Bundestag that all measures mentioned in the coalition agreement are subject to financing.

Merz referred to the lower electricity prices, which are now back to the level before the Russian war of aggression on Ukraine. Despite the announcements to ease the burden on consumers, the question remains as to why not everyone benefits from the reduction in electricity tax. The Chancellor called the criticism of the decision justified, but the financial conditions remain difficult.

Planned relief measures from 2026

In order to relieve the burden on private households and the economy, the federal government plans to implement several measures from January 2026. This includes the abolition of the gas storage levy, which will be offset with around 3.4 billion euros from the climate and transformation fund by the specified date. This measure is expected to result in lower gas prices for gas customers, which in turn is expected to reduce electricity production costs in gas-fired power plants, which could have a positive impact on electricity prices.

In addition, the reduction in electricity tax for manufacturing companies and agriculture and forestry should be continued. This reduction burdens the budget with around three billion euros annually. The coalition also planned to partially finance the transmission network fees from the budget in order to relieve the burden on all electricity consumers.

Draft budget and parliamentary procedure

The federal government has submitted the budget draft to the parliamentary process. A first discussion in the Bundestag is planned for the beginning of July, while the adoption of the budget for 2025 is scheduled for September. In order to put the measures into effect, the approval of the Federal Council and the signature of the Federal President are also required. In this regard, too, legal regulations for energy price measures must be put in place.

The coming months will be crucial in actually implementing the announced relief measures and meeting the challenges on the energy market. It remains to be seen how the coalition can balance the different interests within the government and the parties.

For more information on the planned energy price cuts and the current political situation, you can read the reports on Süddeutsche.de and Federal Government.de read.