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Germany to Reduce Gas Sales Tax in Effort to Provide Consumer Relief

German Chancellor Olaf Scholz announced on Thursday that Germany will be lowering the sales tax on gas by 7%. The reduction is expected to apply through 2024.

This move comes as the German government seeks to curb the energy costs faced by consumers, particularly as the price of energy supplies continues to increase. The country is currently in talks with the European Commission to discuss alternative routes to reducing the energy costs faced by consumers. These discussions came into effect after it was confirmed that Germany’s bid for a value-added tax exemption would not be possible.

From October 1, levies that are expected to add hundreds of euros to the average family’s electricity bills will come into effect, it was announced this week. The purpose of the levies is to help energy company Uniper to cope with soaring prices. Currently, Uniper remains Germany’s largest importer of Russian gas. The primary function of the reduction in gas sales tax is to offset the increase imposed by the impending levies.

Russian natural gas imports to Germany have significantly decreased in recent times, with the Nord Stream 1 pipeline operating at just 20% capacity at present.

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