A tax cut on fuels has spared drivers in Germany from sky-high costs since the start of May, but the federally subsidised ‘discount’ is set to end on June 30th.
Germany’s so-called fuel discount is set to end at the end of June as planned.
The energy tax cuts had been originally introduced as a temporary measure, with a suggested end date of June 30th. Since then, there has been some discussion about a possible extension of the relief, as it does not look likely that transit through the Strait of Hormuz will return to normal any time soon.
Now German media reports have confirmed that the government does not plan to extend the fuel discount any further.
“After long consultations, we have decided that we will let the fuel discount expire as planned on June 30th,” parliamentary group vice-chairmen Sepp Müller (CDU) and Armand Zorn (SPD) told Bild.
Müller added the fuel discount had worked well, but that extending the tax break would not make sense financially.
“We cannot afford to take on debt for this,” he said.
However, German leadership has warned oil companies against price gouging at the end of tax break.
The coalition is prepared to stop a possible price explosion, Müller and Zorn insisted.
“If the [fuel price] changes dramatically on July 1st, we can react quickly,” they said, adding that even during the summer holidays, the Bundestag could be convened for a special session for this purpose.
Germany’s Federal Cartel Office was recently given more power to investigate suspected price manipulation after fuel prices rose much faster in Germany than in other countries following the outbreak of war in Iran at the end of February.
READ ALSO: How to save money on fuel in Germany as prices hit all-time high
Meanwhile, German federal leaders are reportedly considering other measures to bring financial relief during the ongoing period of heightened fuel costs.
These are said to include: targeted subsidies for drivers with low incomes, a higher commuter allowance, a lower energy tax, a reduction in electricity tax for all, a fuel price cap and an excess profit tax for oil companies.
The fuel discount, which has been in effect since May 1st, reduced the tax on fuels by almost 17 cents per litre. The rebate was set to last for two months and costs the state an estimated €1.6 billion.
This comes as Germany’s leadership wrestles with a long-list of cost-saving measures and major reforms, many of which they want to solidify before parliament breaks for the summer recess.
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