The fuel discount, which has been in effect since the beginning of May, will expire on July 1st. Germany's governing coalition parties, CDU/CSU and SPD, have confirmed that the country's fuel tax discount will not be extended beyond June 30. The decision was announced by Sepp Müller (CDU) and Armand Zorn (SPD), deputy parliamentary leaders of their respective parties, in statements to Bild on Wednesday.
"After lengthy deliberations, we have decided to let the fuel discount expire as planned on June 30," said Zorn. Müller added: "It makes no fiscal sense. We cannot afford to take on new debt for this in the current situation."
Both politicians issued a direct warning to petroleum companies against using the expiry of the discount as an opportunity to drive up prices sharply. The coalition, they said, was prepared to act swiftly if the situation deteriorated.
"If the situation changes dramatically from July 1 onwards, we can respond quickly," the two deputy leaders stated jointly. "That also applies during the summer holidays and the parliamentary recess." They indicated that the Bundestag could be convened for special sessions in such a scenario, adding: "We expect the federal states to go along with us in the Bundesrat."
A range of potential measures is reportedly being considered should pump prices surge after the discount ends. These include targeted subsidies for low-income drivers, an increased commuter tax allowance, a reduced energy tax rate, a general cut to electricity tax, a fuel price cap, and a windfall profit tax on oil companies.
Neither Müller nor Zorn specified a price threshold at which the coalition would intervene. Müller also announced plans to tighten competition law further, stating the aim was to "clean up the market and create more transparency."
Following the coalition's announcement, the mineral oil industry association Fuels and Energy pledged to continue passing the full tax reduction on to customers until the discount ends. "Petrol stations have passed on the full tax reduction on petrol and diesel to customers from the very beginning and will continue to do so until the scheme ends," an association spokesperson told the Rheinische Post on Thursday. "We made a promise and we are keeping it."
The fuel tax discount involves a reduction in energy taxes on petrol and diesel of 14.04 cents per litre. Including the associated VAT component, the total tax reduction amounts to 16.7 cents per litre for both fuels. The relief was legislated for May and June only, and is estimated to cost the state around 1.6 billion euros in total.
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