The German government has invested almost 24 billion euros in relief measures to counter rapidly rising energy prices due to the war in Ukraine. The money is going toward increased social welfare benefits, reduced gas taxes, and a heavily discounted monthly public transport pass. But are these measures actually offsetting the increased costs?
As data from the study “Living in Germany” show, the increase in energy prices is placing the most severe burden on poorer households. For the poorest 10 percent of the population, the costs of electricity, heat, and fuel will eat up 6.7 percent of net income in the next 12 to 18 months. These households will receive 3.7 percent of that back in the form of government relief, leaving them with an energy burden of 3 percentage points. leaving them with an energy burden of 3 percentage points.
For the richest 10 percent of households in Germany, energy costs will only consume an additional 2 percent of net income. They will receive 0.7 percent of that back in government relief, leaving them with an energy burden of just 1.3 percentage points.
“There is a lot to be said for not reducing the tax burden on higher income earners, and in the medium term, for raising taxes on very high incomes and assets,” says economist Stefan Bach of DIW Berlin, who carried out the study with his colleague Jakob Knautz.