Chancellor Friedrich Merz, CDU, has announced relief in view of the high fuel prices. That's why a debate has now broken out as to what these should look like. Federal Economics Minister Katherina Reiche, CDU, has now rejected the SPD's central demands.
According to consistent media reports from ministry circles, both a price cap on fuels like in Luxembourg and a so-called excess profits tax are “problematic”.
Merz also against excess profits tax
The Luxembourg model cannot be transferred to Germany due to the difference in size and the different market structures. “Such an intervention would also entail legal and financial risks for the state,” it said.
Taxation of the crisis profits of oil companies is rejected from a “legal and economic perspective”. The legality of a similar EU measure from the 2022 gas crisis is currently being clarified in court.
Economist Monika Schnitzer also considers the measures to be problematic. “Another fuel discount or a blanket price cap would be the wrong approach from an economic point of view because they weaken the scarcity signal of high oil prices and can cost the state a lot of money,” Schnitzer told the Rheinische Post. An excess profits tax is also not an easy way out, because excess profits are difficult to clearly define.
The Chancellor had also spoken out against an excess profits tax.
Rich and CDA for direct payments
In the past few days, Reiche himself had brought up direct payments to households with low incomes, which would have to be implemented by the Federal Ministry of Finance.
The chairman of the CDU employee wing CDA, Dennis Radtke, also spoke out in favor of this measure. “Direct payments to people with small and medium incomes are the right thing to do if they come quickly and unbureaucratically,” Radtke told the newspapers of the Funke media group.
In Radtke's opinion, however, that is not enough. “If the prices at the pumps move significantly faster than the procurement costs, it must be clarified who is making what crisis profits.” According to Radtke, it would be difficult to explain to people if the state spent billions on relief and at the same time "corporations' profits were bubbling up."
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.”
Less VAT on fuel?
But there is now another initiative coming from the Union: parliamentary group leader Thorsten Frei is proposing a reduction in VAT on petrol and diesel as a relief for the high fuel prices. “In my opinion, charging only seven percent VAT instead of 19 would be an obvious measure,” said the CDU politician to the TV channels RTL and ntv. Another option is to reduce the energy tax again. We now have to decide very quickly, “because we are dealing with an acute problem that has continued to worsen.”
The federal government should decide on emergency measures by October 1st. “We have managed to do that in the past in this short time frame.” 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," explained the Union parliamentary group leader.
The price increase is also affecting freight forwarders
Meanwhile, German freight forwarders are also pushing for government relief. “We are not calling for subsidies with a watering can. We are calling for an upper limit for fuels like in Belgium and Luxembourg,” said Dirk Engelhardt, board spokesman for the Federal Association of Road Haulage and Logistics (BGL), to the Augsburger Allgemeine. He also called for a cheaper transport diesel model based on neighboring European countries. According to the industry representative, freight forwarders are currently shutting down trucks to a noticeable extent due to the high expenditure on diesel.
According to the report, the German Chamber of Commerce and Industry (DIHK) considers another approach to be more suitable: the federal government should consider reducing energy taxes to the European minimum, DIHK foreign trade head Volker Treier told the paper. He warns that the jump in energy prices threatens to place a significant burden on the German economy.
