Without gas and electricity price brakes: Relief packages will cost 135 billion euros by 2024

Without gas and electricity price brakes
Relief packages will cost 135 billion euros by 2024

In March 2022, the government passed the first relief package, and there are now three. It is not only the measures that are difficult to survey – the state funds spent on them are also difficult to oversee. The Ifo Institute is now presenting concrete figures on how much the budget is burdened and the population relieved.

According to calculations by the Ifo Institute, the federal government’s three relief packages will cost the state budget around 135 billion euros in 2022, 2023 and 2024. That is 3.8 percent of economic output in 2021, the IFO explained. The gas and electricity price brake is therefore not included in the total. The Institute estimates their costs at a further 90 billion euros.

Broken down by budget year, the Ifo puts the relief from the three government packages at 33.3 billion euros this year and 49.0 billion euros next year. In 2024, the sum would then amount to 52.2 billion euros.

Energy money is particularly expensive

“The biggest chunk this year is the net 10.4 billion for workers’ energy money,” explained IFO expert Max Lay. This was followed by six billion for the pensioners’ energy money, 3.1 billion for the temporary reduction in energy tax, 2.7 billion euros for the increase in the basic tax-free allowance, 2.5 billion for the nine-euro ticket and 2.0 billion euros for reducing sales tax on gas.

In the coming year, according to the IFO calculation, the sales tax reduction for gas will even add up to 6.5 billion euros. IFO expert Andreas Peichl said that the loss of real income due to higher energy prices “must be borne by society”. The state cannot prevent these losses, it can only redistribute them.

In Peichl’s view, the state should follow two rules: Energy saving incentives must be maintained across the board and aid should only be given to households that are particularly affected. On the other hand, if the state tries to shield the entire population, it can provide fewer public goods or have to levy higher taxes in the future.

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