Germany's Merz vows electricity tax cut for all consumers to close 'credibility gap'

BERLIN, Oct 12 (Reuters) - German Chancellor Friedrich Merz vowed on Monday to lower an electricity tax for all consumers to the EU minimum, following a meeting of his conservatives on how to address voters' concerns after losing ground to the far right in recent state elections.

• The cut had initially been planned for last year but was abandoned due to a lack of budgetary leeway.

• "Our aim is not only to provide relief but also to close the credibility gap that arose for all of us as a result of that decision last year," said Merz.

• He said the budget leeway exists if recent optimistic economic growth projections hold, which could lead to roughly €5 billion ($5.6 billion) in additional federal tax revenue  - precisely the amount needed to lower the tax.

• At a separate press conference on fiscal policies, Finance Minister Lars Klingbeil, however, was cautious about the move's longer-term viability. "We are pleased about the return of economic growth but I can't confirm the assumption that this could permanently fund the electricity tax cut," said Klingbeil.

• The electricity tax was introduced in 1999 as part of Germany's ecological tax reforms. It is charged at 2.05 euro cents per kilowatt-hour and is passed on to consumers through their electricity bills.

• It has already been reduced to the European minimum level of 0.05 cent per kilowatt-hour for some business sectors. Merz now wants to extend that lower rate to all consumers.

($1 = 0.8945 euros)

(Reporting by Andreas Rinke, Writing by Miranda MurrayEditing by Ludwig Burger and Susan Fenton)