Fuel Prices: Cabinet Advances Tank Discount Plan
The new fuel discount is set to take effect on October 1 – the cabinet has now approved the draft legislation through a written circulation procedure. The Bundestag and Bundesrat are expected to pass it this week.
The federal government is moving quickly on the planned fuel discount and has set the draft legislation in motion. According to a government spokesperson, the cabinet approved it through a written circulation procedure. The Bundestag and Bundesrat are set to endorse the measure before the end of this week.
Starting October 1, the energy tax on diesel and petrol is to be reduced by around 14 cents per liter. Including VAT, the government says this amounts to a relief of up to 17 cents per liter at the pump. The relief is scheduled to run until December 1.
The Finance Ministry estimates that the measure will result in €2.485 billion less in tax revenue for the federal government. The states are expected to bear half of that amount.
Discount Already in Place in May and June
The federal government agreed on the measure with the states last Friday. The aim is to cushion the sharp rise in fuel prices since the Iran war. An identical discount had already been in place in May and June.
Economists are critical of the fuel discount. Among other things, they argue that it is costly, poorly targeted, and benefits people who do not need the support.
There is debate over how much of past fuel discounts actually reached consumers. In the case of the summer tax relief, the Federal Cartel Office, the Monopolies Commission, and the Ifo Institute had concluded, among others, that the tax benefit was not passed on in full. The mineral oil industry, however, disputes this.
