Critics Slam Reduced Gas Tax - 'Policy Following the Can's Rule'
**"Here's another swing at the political ball," quips Jens Südekum, an advisor from the Federal Ministry of Economics' brains trust, speaking to Reuters recently. "This move is headed down the wrong path," he warns. "What we truly need is a policy that lets prices do the talking and provides support where it matters: for people with modest incomes," argues the University of Düsseldorf professor. "Slashing VAT on gas misses the mark on both accounts." It doesn't just favor the well-off earners, who the government can't currently assist. Moreover, discounts to save gas are minimized. "Exactly the opposite of what we need right now is made a reality," Südekum grumbles.
Scholz earlier declared that he'd knock the VAT on gas down from 19% to 7% by March 2024 to help citizens teetering under gas costs. Officially, it's slated to kick off in October. "This should reduce inflation by about 0.3 percentage points," said Jörg Krämer, head economist at Commerzbank. "Come October and November, we predict inflation won't be significantly greater than 9%, but around 9%." While it's great that the government isn't making a dime off gas surcharges, says Krämer, "They could have cranked up the savings incentives by helping citizens directly with cash instead of doing it through gas prices."
Michael Holstein, chief economist at DZ Bank, weighs in with a similar impression. "A financial lifeline for citizens is pocket-friendly and good for the economy," says Holstein. "However, expensive energy should prompt frugality, not be stripped down by the state via discounts." This approach mirrors the costly fuel discount, which ultimately didn't provide enough support. A better method would be to help families with lower incomes directly. "That's the whole point of a social economy, especially in dire straits like these," concludes Holstein.
- Jens Südekum, an advisor from the Federal Ministry of Economics' brains trust, argues that a policy that lets prices do the talking and provides support where it matters, particularly for people with modest incomes, is necessary to reduce inflation.
- Jörg Krämer, head economist at Commerzbank, suggests that the government could have directly helped citizens with cash instead of reducing VAT on gas, a move that he believes might have provided greater benefits in reducing inflation.
- Michael Holstein, chief economist at DZ Bank, expresses a similar view, stating that a financial lifeline for citizens is beneficial for the economy but expensive energy should prompt frugality, not be reduced by the state via discounts.
- Holstein concludes that a better method would be to help families with lower incomes directly, as this approach mirrors the costly fuel discount, which ultimately didn't provide enough support.
- In the general news, discussions are ongoing about the potential benefits of direct financial aid for citizens struggling with inflation, particularly as it relates to the reduction of VAT on gas and the overall fiscal policy of the government in Düsseldorf.
