German industry divided over planned fuel tax cuts

German think tanks and trade bodies are split over whether government plans to slash taxes on petrol are likely to be a help or a hindrance.

A taxi driver fills up his car at a Berlin petrol station.
A taxi driver fills up his car at a Berlin petrol station. Photo: picture alliance/dpa | Carsten Koall

In an energy relief package announced on Thursday, the traffic-light coalition said it would support car owners with drastic cuts to energy taxes on fuel.

The tax cuts will see energy levies slashed to the minimum level allowed under EU competition laws, which equates to around 14 cents per litre of diesel and 30 cents per litre of petrol.

Currently, energy tax adds around 47 cents to a litre of diesel and around 63 cents to a litre of petrol, meaning drivers could see the prices of both go down by around 30 cents per litre. 

The move is likely to be welcomed by the ADAC motorists’ association, who have been complaining of the high fuel prices in recent weeks.

But other commentators have suggested that plans could have a negative effect on energy use and encourage drivers to use more fuel. 

The IfW think tank said they welcomed the government’s push to mitigate the price shocks, particularly for poorer households, but warned that the fuel tax reduction “lowers the incentive to save energy”.

Meanwhile, Germany’s Chambers of Industry and Commerce (DIHK) called the temporary tax cut a drop in the ocean, and said more targeted help was needed to support businesses.

“The historically high electricity and energy costs are threatening the survival of many German firms,” DIHK chief Peter Adrian said.

Industry under investigation

The prices of natural gas and oil have been rising steeply in recent months due to supply issues and the impact of the war in Ukraine.

But the government believes that some petrol stations and other energy companies may be using the current situation as an excuse to hike prices and accrue larger profits.

Economics Minister Robert Habeck (Greens) has argued that some large petrol station brands could be making “war profits” due to their powerful positions within the market. 

In order to rule this out, the government wants to leverage antitrust and competition laws to ensure that lower taxes and falling commodity prices are passed on to the end consumers.

This will involve giving greater powers to the Federal Cartel Office to ask for company data and investigate potential profiteering. 

The fuel price cut was just one of several measures revealed by the government on Thursday, with consumers also in line for cheaper transport tickets, an energy allowance and a child bonus for families.

READ ALSO: Cheap transport and tax cuts: What Germany’s energy relief package means for you

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German state environment ministers push for Autobahn speed limit

Environment ministers in Germany's 16 states want to see a temporary Autobahn speed limit to help cut down reliance on Russian gas.

German state environment ministers push for Autobahn speed limit

Calls have been growing for a temporary speed limit or Tempolimit on Germany’s Autobahn network to further reduce dependency on Russia’s energy amid the war on Ukraine.

But the move has seen severe pushback from some politicians – in particular the Free Democrats (FDP).

On Friday, German media site Spiegel reported that the Conference of Environment Ministers had come out in favour of a temporary speed limit on the Autobahn, which is the only stretch of motorway in Europe where people can drive as fast as they want in many sections.

It’s a significant move given that the issue is so contentious in Germany. 

Spiegel said that the ministers agreed a resolution on Friday to introduce a temporary nationwide speed limit. However, they did not specify what the maximum speed should be.

The Greens have campaigned for a number of years to impose a 130km/h (around 80 mph) limit on German motorways – but the party had to abandon this electoral promise last year during coalition negotiations to keep the freedom-loving FDP from walking.

According to environment ministers in the states, a general speed limit should be introduced as a “cost-effective, quickly to implement, and immediately effective measure” so that Germany consumes less petrol and diesel, and becomes less dependent on oil imports.

READ ALSO: Could Germany introduce an Autobahn speed limit?

At the same time, the step would help protect the climate, keep the air clean, reduce noise and make roads safer, they said. The speed limit could “initially be introduced for a limited period during the ongoing conflict”, the resolution said in reference to the war in Ukraine. In the long term, the focus is on the expansion of electric mobility and local public transport.

“I think it is absolutely right that we set a visible sign,” Lower Saxony’s environment minister Olaf Lies (SPD), chair of the conference, told Spiegel. “We did not have an ideological debate.”

Rather, he said, it was about a pragmatic response to the supply crisis because of the war.

The move was backed by all states. The environment ministers in Bavaria (Thorsten Glauber, Free Voters) and North Rhine-Westphalia (Lutz Lienenkämper, CDU) voted in favour, but issued a note stating that they only expect a speed limit to have a limited effect.

In the other 14 states, the ministries are led by the Greens or the SPD.

The federal states can’t implement the decision on their own – this would require a federal law.

“Now it’s the federal government’s turn,” tweeted Hesse environment minister Priska Hinz (Greens). 

So far, none of the states has announced an initiative in the Bundesrat, the parliament that represents the states – but they are sending a strong message to the federal government.