Germany plans 17-cent fuel tax cut from October as coalition debates windfall tax

  • Germany plans to approve a gasoline and diesel tax reduction and introduce it October 1.
  • The rebate will cost federal and state governments approximately €2.5 billion.
  • Finance Minister Lars Klingbeil supports an excess-profits tax opposed by Katherina Reiche and Friedrich Merz.

Germany plans to approve a gasoline and diesel tax reduction on Monday and introduce it on October 1 after parliament considers the bill this week. The government has described the relief as €0.17 per liter, while an earlier account broke the reduction into 14 cents in energy taxes plus value-added tax, producing 17 cents in total relief. The measure is expected to cost federal and state governments about €2.5 billion. Finance officials say the government wants to recover the money through a tax on excess energy-company profits, but the proposal has exposed divisions between Finance Minister Lars Klingbeil and Economy Minister Katherina Reiche and Chancellor Friedrich Merz. Oil prices have risen above $100 a barrel, about 50% above levels before the Iran war, as attacks threaten supply routes. The latest rebate follows earlier relief in May and June, while economist Veronika Grimm criticized fuel subsidies as short-term policymaking that shifts costs to younger generations. Berlin has also discussed a fuel price cap by January 1, 2027, although Reiche remains skeptical.

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