Electricity prices for the economy should be reduced through tax reform - opportunities and risks for investors

Electricity prices for the economy should be reduced through tax reform - opportunities and risks for investors

According to a report by www.sueddeutsche.de, the federal government is planning a tax reform to reduce the price of electricity for the economy. This includes reducing electricity taxes for the manufacturing industry and expanding electricity price compensation for corporations that suffer from high electricity prices.

The planned reduction in electricity tax from currently around two percent to the European minimum of 0.05 percent would benefit both large industrial groups and medium-sized businesses. In addition, 350 companies that suffer from high electricity prices and face international competition are to receive additional help. The existing electricity price compensation is to be extended and expanded for five years.

This step is important because industry in Germany pays very high energy prices compared to international standards. The high cost burden has already led companies to consider moving production to countries with more affordable energy prices.

The planned financing via the Economic Stabilization Fund would enable prices to be reduced for the industry. Criticism of this project came from the FDP because it contradicted the principles of the social market economy and would reduce the incentive for energy efficiency.

The agreement between the parties is now viewed positively. Finance Minister Christian Lindner emphasized that all measures are financed within the framework of the debt brake. Chancellor Olaf Scholz spoke of good news for Germany as a business location and emphasized the planning security for companies.

Given these plans to reduce industrial electricity prices and their financing through the Economic Stabilization Fund, it is expected that the affected industries will experience relief in energy costs. In the long term, this can strengthen the competitiveness of German industry and help keep jobs in the country. However, the effects on the electricity market are not yet foreseeable and must be further monitored.