Nuclear fuel tax 'formally unconstitutional'

30 January 2013

Germany's tax on nuclear fuel was designed 'to siphon off the profits of the nuclear power plant operators', judges in Hamburg have ruled. The tax exceeds government competence and contradicts the country's constitution.

The clear and final decision announced today by the Hamburg Tax Court (Finanzgericht Hamburg) sends the matter to the Constitutional Court - the only court in Germany that can declare the law invalid.

Since January 2011, each gram of fissile nuclear fuel loaded into a reactor has carried a levy of €145 ($196), and this means that nuclear power plants have so far paid around €1.5 billion ($2.0 billion) through the tax.

Neckarwestheim 2 (EnBW) 460x120
The Neckarwestheim plant, where unit 1 was shut by government order and unit 2 will continue until 2022 (Image: EnBW)

Notes from the court said there had always been 'considerable doubt' about the legal basis of the tax, which was challenged by utilities soon after the government abandoned their deal on longer operating lives. The tax was upheld by the Stuttgart Tax Court, but labelled doubtful in Hamburg. A government appeal to that decision has kept the tax in effect to date, but today's statement that the Hamburg Tax Court is 'convinced' that the tax is 'formally unconstitutional' will send it to the Constitutional Court.

Origin of the tax dispute

Having held anti-nuclear policies for ten years, the German government realised in 2008 that it needed reliable power supply from the nuclear sector for longer than existing phase-out rules allowed. Chancellor Angela Merkel began long negotiations to make changes to allow utilities to operate nuclear power plants for longer. In return, the power companies would have to sacrifice a significant part of the resulting profit by paying a fuel tax. This was agreed in late 2010 with the tax coming into force in January 2011. However, Germany's reaction to the accident at Fukushima Daiichi three months later saw the government unilaterally change the deal: Longer operation was cancelled and eight reactors were ordered shut - but the fuel tax remained.

Germany's constitution specifies the kinds of taxes that federal government can legislate, including excise duties meant to reduce private consumption. The nuclear fuel tax had been put through in that category, but this was ruled wrong because its application did not take any effect on the consumption of the consumer good, electricity. Instead, as supported by official statements made during the legal process, 'the purpose is to siphon off the profits of the nuclear power plant operators.'

Separately Germany is encouraging the same companies to invest in a huge renewable boom subsidised by levies on power bills. Large power users in industry pay comparatively much less than households, as Germany seeks to maintain competitiveness. The political goal is to establish renewable generation at 20% by 2020, stop using nuclear power two years later and meet 80% of demand with fossil fuels.

Researched and written
by World Nuclear News