Merz vows electricity tax cut for all consumers to close 'credibility gap'

Friedrich Merz Promises Electricity Tax Cut for All German Consumers

German Government Plans to Lower Electricity Tax

BERLIN, Oct 12 (Reuters) - German Chancellor Friedrich Merz vowed to lower the electricity tax for all consumers to the EU minimum on Monday, following a meeting of his conservatives on how to address voters' concerns after losing ground to the far right in recent state elections.

Background and Previous Plans

• The cut had initially been planned for last year but was abandoned due to a lack of budgetary leeway.

Addressing Credibility and Relief

• "Our aim is not only to provide relief but also to close the credibility gap that arose for all of us as a result of that decision last year," said Merz.

Budget Leeway and Economic Projections

• He said that the budget leeway exists if recent optimistic economic growth projections hold, which could lead to roughly €5 billion ($5.6 billion) in additional federal tax revenue  - precisely the amount needed to lower the tax.

Details of the Electricity Tax

History and Current Rates

• The electricity tax was introduced in 1999 as part of Germany's ecological tax reforms. It is charged at 2.05 euro cents per kilowatt-hour and is passed on to consumers through their electricity bills.

Reductions for Business Sectors

• It has already been reduced to the European minimum level of 0.05 cent per kilowatt-hour for some business sectors. Merz now wants to extend that lower rate to all consumers.

Exchange Rate Information

($1 = 0.8945 euros)

Reporting Credits

(Reporting by Andreas Rinke, Writing by Miranda MurrayEditing by Ludwig Burger)