Germany approves new fuel tax reduction from October 1

Germany’s Bundestag on Friday, September 25, approved a temporary reduction in taxes on petrol and diesel, with lawmakers from the governing CDU/CSU and SPD parliamentary groups backing the measure.

The government expects the new fuel discount to take effect on October 1, although the bill still requires approval by the Bundesrat.

Under the measure approved by parliament, the energy tax on both petrol and diesel will be cut by 14.04 cents per litre. For diesel, that represents the maximum reduction permitted under EU rules, while the same reduction will apply to petrol.

Because value-added tax will also be reduced as a result of the lower energy tax, the overall reduction in the tax burden will amount to 16.7 cents per litre. The measure is due to remain in place until the end of December.

The government estimates that the tax cut will reduce budget revenue by €2.485 billion. Unlike the previous fuel discount introduced in May and June, when the federal budget covered the entire cost, the federal states will finance half of the expected shortfall this time.

The measure has drawn criticism from experts, as did the previous fuel discount. They have pointed to its high cost and limited targeting, arguing that the benefit will also go to people who do not need financial assistance.

By Tamilla Hasanova