Savings potential for consumers: if the VAT for electricity were to fall

In the shadow of the gas price development, the electricity price is also rising rapidly.

Savings potential for consumers: if the VAT for electricity were to fall

In the shadow of the gas price development, the electricity price is also rising rapidly. The value-added tax for gas was therefore reduced to 7 percent in order to reduce the burden. After all, basic services should remain affordable for everyone. So why not also for electricity? How much could households save?

Now the horrendously rising electricity costs for consumers and companies have also been identified as a price driver. Regardless of the fact that the price of electricity has only known one direction in recent years - upwards. But admittedly, these times are special.

According to the comparison portal Verivox, the average electricity price for private consumers in Germany with an annual consumption of 4000 kilowatt hours in a model household was 45.81 cents per kilowatt hour at the end of August. This corresponds to an increase of more than 50 percent compared to the same month last year. A three-person household with the stated annual consumption has to cope with annual electricity costs of 1832 euros.

What to do? Given the exorbitant cost of gas, the state was able to bring itself to levy a lower VAT rate of 7 percent (instead of 19 percent). In principle, essential goods should be made cheaper with a reduced VAT rate. So now also gas, albeit only temporarily - until March 2024. About why gas has not been classified as essential for life, although it is used as a heating medium by about half of all households in the Federal Republic and regularly saves many from frostbite in winter, may be puzzled.

Many people could also follow the logic of classification as a vital good when it comes to electricity. Especially since a reduced value-added tax would also relieve households here.

So the previously theoretical question arises as to how much could be saved if only 7 instead of the current 19 percent VAT were levied on electricity. Verivox has calculated the matter and comes to the conclusion that the above budget could be relieved by 184 euros.

In addition, the electricity tax for private consumers is currently 2.05 cents per kilowatt hour. For a three-person household, this results in costs of 82 euros net per year. At the national level, the electricity tax cannot be completely abolished due to EU regulations. The European Union provides for a minimum rate of 1 cent/kWh for the electricity tax. A corresponding reduction would relieve households by 42 euros net.

In summary, this means: If the electricity tax were reduced to the possible minimum and the value added tax from 19 to 7 percent, the average annual costs for a three-person household would fall from 1832 euros to 1602 euros. That would correspond to a cost reduction of 13 percent, households would pay a total of 230 euros less.