The Bundestag and Bundesrat decide on a new fuel discount and fuel price cap

The Bundestag and Bundesrat are expected to approve the new fuel discount today. The black-red coalition had already agreed on a relief package last Friday because of the recent sharp rise in gas station prices in the wake of the Middle East war. An overview of what is now planned:

How should the high fuel prices be reduced?

The first relief instrument is known as the tank discount. This means a reduction in the energy tax on fuels by 14 cents per liter. This also reduces the VAT levied on it, resulting in a total tax reduction of almost 17 cents per liter.

The second instrument is the fuel price cap. The state sets a maximum price for fuel, for example daily. An authority calculates the maximum permitted prices for petrol and diesel based on various factors. In addition to the fuel price, the costs of transport, storage, insurance and losses are also taken into account. Companies are also allowed a profit margin.

Thirdly, further “targeted measures” for citizens, especially those with small and medium incomes, as well as for companies will be examined at the beginning of the new year, the government announced.

When should these reliefs take effect?

The fuel discount should be valid from October 1st until the end of this year, if possible, for three months. The price cap should be introduced by January 1, 2027 at the latest, i.e. after the fuel discount, not permanently, but as long as the crisis lasts.

The Bundestag and Bundesrat will decide on the fuel discount today. There is less time pressure for the legislature when it comes to the fuel price cap. The federal government wants to “enter into regular discussions with the oil industry” in order to then determine how the maximum prices for fuels will be set.

Will the tax cut reach consumers?

That can only be said after the return to the old tax rate, but experience shows that corporations are allowed to pass on the discount to customers, but perhaps not completely. This was shown by analyzes of the fuel discount in May and June, for example by the Federal Cartel Office and the Monopolies Commission, even though the oil industry emphasized that it had passed on the tax relief "consistently and in full".

According to the Munich Ifo Institute, the relief from Super E5 and Super E10 was almost completely felt at the petrol pumps. For diesel, however, only an average of 12 cents per liter was passed on - significantly less than the 16.7 cents by which the tax was reduced. After the discount expired at the end of June, prices rose again.

How much do the measures cost taxpayers?

The federal government expects around 2.5 billion euros. The two-month fuel discount in early summer cost the federal government around 1.6 billion euros. Exactly how much it will depend on how much people fill up. And whether it will be possible to implement the fuel discount on October 1st.

What is new and special is that this time half of the states are participating. Ultimately, it is a discount at the expense of taxpayers - and therefore also those who do not drive cars or drive trucks across the country.

The planned fuel price cap is different. If a mechanism for maximum prices for gasoline and diesel is agreed with the oil companies, this will most likely lead to lower profit margins for the companies and therefore cost the general public nothing. This already exists in the neighboring countries of Belgium and Luxembourg.

Who benefits from the two instruments?

Everyone who fills up the tank benefits from the tax cut. The larger the amount, the greater the relief. This means that drivers who use a lot of fuel in their car or who drive long distances benefit most from the discount. This also applies to shipping companies.

There is no incentive to save fuel in the fuel discount or in the price cap. The extent to which the cap depresses prices depends on the calculation method, which is not yet known.

Source: dpa