Germany cuts taxes on petrol and diesel: What you need to know
The Bundestag and Bundesrat have approved the federal government’s plan to lower taxation on fuel from June 1. Here is what drivers in Germany need to know.
Tax cuts on petrol and diesel in Germany
People’s bank accounts have taken a real hit in recent months as a result of skyrocketing prices for fuel, energy and food. The federal government is therefore stepping in with a number of relief measures, including the 9-euro ticket and a tax cut on fuel, with Federal Chancellor Olaf Scholz promising that these measures will benefit citizens “directly, quickly and purposefully.”
While the 9-euro ticket promises cheap access to public transportation throughout the summer months, drivers can also look forward to some relief, after the Bundestag and the Bundesrat approved a proposal to the minimum permitted in the EU for three months, at a cost of almost 3,15 billion euros to the state.
How much is the fuel tax discount?
Since around 50 percent of the price of fuel in Germany is made up of taxation, tax cuts can actually make a significant difference. The tax burden on petrol in Germany will be temporarily reduced by 29,55 cents per litre - or almost 35,2 cents per litre, including VAT. Taxes on diesel will be reduced by 14 cents per litre, or 16,7 cents with VAT.
However, it’s not yet clear the extent to which oil companies will pass this discount onto consumers, but estimates point to petrol becoming around 15 to 30 cents cheaper per litre, and diesel 11 to 14 cents cheaper.
For how long will fuel be cheaper?
The measure is initially limited to three months, so the discount will only be applied in June, July and August.
However, before everyone starts flocking to petrol stations on June 1 to fill their tanks with discounted fuel, it’s worth bearing in mind that experts expect there to be a lag of a few days before prices noticeably fall.
This is because petrol station owners will likely try to sell off their existing stock of (more expensive) fuel before the new, lower prices come in. Nonetheless, June 1 will probably see long queues at petrol stations, and so ADAC has advised people not to put off going to refuel if they’re running low at the end of May.
What are people saying about the fuel tax cut?
While undoubtedly coming as a relief for those feeling the pinch at the pump, the move is not without its critics. The plan has come under fire especially for the fact that petrol prices have noticeably reduced in recent weeks, after exploding immediately following the Russian invasion of Ukraine.
Others have suggested that the government should not be subsidising fuel, arguing that this encourages people to use their cars and thus sends the wrong message when the country is busy saving and stockpiling energy supplies for the winter. “It is counterproductive to lower petrol prices in this situation, because people will drive more,” economist Veronika Grimm said to ARD.
Economics Minister Robert Habeck has countered this claim by saying that the continued high price of fuel will put many people off driving nonetheless. “Many people are suffering from the high fuel prices,” he said. “They’ll still suffer enough even if the fuel tax is lowered for three months. So in truth it’s not really cheap driving.”
The price comparison portal Verivox has further argued that the relief package represents little more than a drop in the ocean compared to the rapidly rising prices faced by households in Germany. According to their calculations, the average household will have an additional burden of 2.408 euros per year in 2022, while the government’s package only brings around 1.035 euros of relief.