Federal Economics Minister Reiche proposes a temporary reduction in VAT on fuels

Federal Economics Minister Katherina Reiche has proposed a temporary reduction in VAT in view of the high fuel prices. The tax on fuels should be reduced from 19 to seven percent, said the CDU politician on the sidelines of the G20 energy ministers' meeting in Houston (USA). This would work directly at the pump and relieve the burden on citizens and the logistics industry.

Reiche admitted that companies capable of deducting input tax would not benefit directly from a sales tax reduction. Therefore, ways are being examined as to how the medium-sized transport industry can be specifically relieved. Reiche rejected a fuel price cap. Such a cap would weaken the medium-sized refinery industry and has already failed in other EU countries.

Even an excess profits tax doesn't convince them. This is legally uncertain and prevents necessary investments in more refinery capacity in Germany. For people with low incomes, she also brought up a direct payment mechanism again, which should be operational at the beginning of next year.

Reducing energy taxes could help

Union parliamentary group leader Thorsten Frei had previously spoken out in favor of a reduction in VAT on petrol and diesel as a relief for the high fuel prices. Another option is to reduce the energy tax again, the CDU politician told the TV channels RTL and ntv. We now have to decide very quickly, “because we are dealing with an acute problem that has continued to worsen.”

Frei admitted that lowering the VAT rate on gasoline and diesel would be expensive for the state. "Nevertheless, I believe that the sharply increased prices also lead to additional revenue in the area of ​​VAT. That's why, in my opinion, it would make sense to give the additional revenue that the state generates back to the taxpayers," he explained.

Consumer advocates are also calling for targeted help

Consumer advocates also called for targeted help for needy households. “Consumers have been suffering from high prices in various areas of life for several months now,” said the head of the Federal Association of Consumer Organizations (vzbv), Ramona Pop, to the Neue Osnabrücker Zeitung. However, a sole focus on reducing fuel prices should not be the answer. The government must take a long-term and comprehensive look at the development of the cost of living.

Green Party co-parliamentary group leader Katharina Dröge also suggests a similar direction. She advocated an immediate reduction in electricity tax, but also an excess profits tax. “It is high time for an excess profits tax for oil companies.” The income would have to reach people directly via so-called energy money - and "not just in weeks or months." “That’s why we’re calling for an electricity tax cut right now.”