German government debates household electricity tax cut in U-turn following public outcry

The parties in Germany’s government coalition are debating a reduction of household power prices by cutting the electricity tax to the European minimum, after ruling it out only last week. The talks follow a public outcry over the government's budget plans, which included electricity price reductions for industry but not for households or small businesses - even though the government parties had promised price relief for all in their coalition treaty.

According to the newspaper Frankfurter Allgemeine Zeitung, chancellor Friedrich Merz’s conservative Christian Democrats (CDU) and finance minister Lars Klingbeil’s Social Democrats (SPD) are discussing whether money can be saved elsewhere to make household electricity price cuts possible.

However, Merz warned in a social media statement that the government had to “keep an eye on the budget”. The budget currently plans for about 5.9 billion euros in earnings from the electricity tax, which would be reduced drastically if the reduction by 1.95 cents per kilowatt hour was applied to all consumer groups, the newspaper said.

Some companies, consumer groups and climate activists had criticised the decision to exclude households from the tax reduction. Energy company E.ON said that electricity currently continued to be taxed more than natural gas, slowing the rollout of heat pumps and electric cars, which are considered key for reducing excessive emission in heating and transport.