The tax reform is a compromise between the business-friendly Social Democrats and the hardline Green party. Oskar Lafontaine, finance minister and leader of the Social Democrats, has rejected calls from within his party for all industry to be exempt from the higher energy taxes. Similarly Jürgen Trittin, senior green politician and minister for the environment, has climbed down from his original position of insisting that there should be no exemptions from the energy tax. This has resulted in a lower rate of energy taxation for manufacturing industries, and a system of complete exemption for companies with an extremely high level of energy consumption Dr Rheinhard Loske, environment spokesman for the Green group in parliament stresses that the proposals are unacceptable to both sides. ?We are not 100% happy and neither are the Social Democrats. This is not what we wanted. A pure green version of the eco-tax would have been different. We would have liked to include the high energy industries in the tax. They [the Social Democrats] would have preferred all manufacturing to have been exempt.?
Chancellor Gerhard Schröder was quick to emphasize the positive environmental implications of the reform. Nobody else seems very convinced.
Jürgen Strube, chairman of the board of executive directors at BASF chemicals describes the proposals as ?a slap in the face for those seeking innovative, economical and less-polluting energy generation.? He adds ?these plans, which up to now have been referred to as an eco-tax are in my view merely playing with ecological names.?
He is not the only one to question the motives of the tax. Albrecht Van der Hagen, press officer for the German Federation for Industry, declared that the proposals had nothing to do with ecological considerations ?We know that the environment is not the real consideration for this tax law. There are no taxes on coal but there are taxes on wind energy and nuclear energy. The government planned how much money was needed to subsidise social security costs, set a figure of Dm 12 billion and then planned how the tax would cover that. It should not be called an ecological tax, but rather an anti-industry tax.?
Industrialists and tax practitioners alike fear the tax will effect Germany's ability to compete within the markets. Jurgen Hartmann, tax partner at KPMG in Dusseldorf says:?energy is expensive in Germany. Adding a tax on top of that will make German industry companies uncompetitive within the worldwide markets.?
Jurgen Strube at BASF states ?the bottom line will be a significant burden on industry and the chemical industry in particular.? Critics of the tax have an unusual ally in environmental action group Greenpeace. Kristina Steenbock, head of Greenpeace's department of biodiversity and resource management said: ?We are very disappointed, there are many amendments necessary. The eco-taxation is effectively a consumer taxation. The lack of tax on coal is unacceptable.?
The ecological tax is part of a package of tax reforms being rushed in by Germany's coalition group. The government is expected to abolish company tax exemptions, subsidies and write-offs.
Rheinhard Loske believes that objections to the energy tax are part of a wider disappointment in the package as a whole. ?People expected more in the way of general tax reform and then there was less than they expected. Had we been a bit more brave on general tax reform, opposition to the ecological tax might have been less.?
