Germany Delays Decision on Nuclear Tax

August 19, 2010 Taxation in Germany

Roadside FissionThe German Government is delaying its controversial nuclear power tax proposal, with Chancellor Angela Merkel indicating that a different option could be investigated to replace the levy.

Debate has arisen over continued delays to a contentious plan by the German Government to instate a new tax on nuclear power plant operators, which is intended to raise an additional EUR 2.3 billion to ease the nation’s budget deficit. The Government had previously promised to finalize a proposal for the new tax by September, but on August 18th Chancellor Angela Merkel revealed that the Government has not yet even decided on the exact nature of the tax. According to Norbert Röttgen, Environmental Minister, the Government expects to make a decision about the levy before October.

Originally, the Government proposed levying a set rate on every gram of nuclear fuel (uranium or plutonium) used in power production across Germany. However, the country’s largest energy providers have strongly resisted the tax since its inception, with Johannes Teyssen, Chief Executive of the energy company E.ON, suggesting that the proposal could even be illegal. The energy industry has also unanimously claimed that a new levy will seriously undermine its ability to fund future investments, and possibly even lead to the shutting down of plants, ultimately slowing the German economy.

Instead of a direct tax, the energy companies E.ON, RWE, EnBW and Vattenfall Europe, providers of nearly 80 percent of Germany’s power, have proposed a system of pre-set payments to the Government. Under their counter-offer, the energy companies will make tax-deductible transfers to a Government fund, under the condition that they receive an extension to power plant life-span regulations. Under German law, all nuclear power generators in the country have to be phased out and replaced by 2021. When questioned on the feasibility of the alternative proposal, Angela Merkel said,”If another solution can be found, that’s also fine.”

Photo by