Germany raises energy taxes, chems warn of 'policy mistake'

01 September 2010 17:50  [Source: ICIS news]

TORONTO (ICIS)--Germany’s government on Wednesday decided to go ahead with a move to cut breaks on eco-energy taxes, prompting chemical producers to warn of a mistake in industrial policy that would threaten the country's future chemical investments. 

The government said the cuts, for estimated budget savings of €1.5bn ($1.9bn)/year, would have no perceptible impact on the competitiveness of Germany’s export-based industrial producers.

However, Frankfurt-based chemical producers group VCI said the measure was effectively a tax increase that would make production in energy-intensive industries such as chemicals more expensive - to the detriment of Germany’s international competitiveness.

Together with burdens from renewables regulations and emissions trading, Germany’s chemical industry was facing an additional cost burden of at least €650m by 2013, said VCI general manager Utz Tillmann, citing the group’s latest projections.

As a result, energy-intensive producers would find it much harder to justify investments in Germany, he added.

While VCI welcomed government budget savings, such measures must not go at the expense of industrial employment and growth, he said.

“Only a strong sector of industrial producers will be able to help generate the tax revenues needed to balance government budgets,” he added.

In a related announcement, the government said it expected to make a final decision later this month on a planned special tax on the country’s nuclear industry that would raise some €2.3bn/year to help balance budgets.

A number of German industrial leaders, including BASF chief executive Jurgen Hambrecht, have signed an open letter opposing the tax.

($1 = €0.79)

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