German Finance Minister Christian Lindner has asked the European Commission to allow the abolition of value-added tax on the new gas levy for a limited period of time, Reuters reported.
The German gas market operator is to announce on Monday the levy that Berlin imposes on all gas consumers in order to spread the additional cost of gas imports. The tax is intended to help Uniper and other importers cope with rising prices due to reduced export flows from Russia, but it will exacerbate already sky-high energy prices and inflationary pressures on consumers.
Under EU law on energy VAT, the levy is considered part of the overall gas price, effectively meaning it is mandatory, so Germany needs to seek Brussels' permission to remove it.
Lindner said that while he was asking on behalf of Germany, he was in fact asking for a VAT law change that would give all member states a temporary opportunity to take similar steps.
Lindner's letter says that Germany will formally apply to the EU later, but he wanted to contact Brussels in advance to reassure the authorities that politicians are concerned about possible difficulties and discontent.
VAT on government levies is pushing prices up and meeting growing resistance from the public, especially in the current exceptional situation, he said. However, the adoption of tax laws by the population is critical to ensure its implementation, the report says.
Rising energy prices pose a threat to our prosperity and stability, Lindner said.