(de-news.net) – The government coalition is still undecided on the best concrete course of action to reduce the burden of high fuel prices. Economics Minister Katherina Reiche (CDU) has rejected another fuel rebate in favor of targeted aid, while Chancellor Friedrich Merz (CDU) has pledged a proposal while opposing an excess-profits tax. Fuel price caps, reduced electricity taxes, mobility or climate payments, tax reductions, and renewed public transportation subsidies are some alternative proposals that reflect disagreements over the most efficient and economically viable ways to provide relief.
Merz has indicated that the government plans to ease the burden of high fuel prices, arguing that action is necessary as costs approach a threshold that is becoming increasingly difficult for many people who depend on cars for their daily mobility. While the government has not yet settled on a specific instrument, Merz said the issue has been discussed with state premiers and their administrations. A proposal is expected in the near future, underscoring the growing political pressure to provide relief while determining which approach can be implemented within existing fiscal constraints.
Reiche has also supported measures to ease the burden on consumers but rejected another fuel-price rebate because of the coalition’s limited financial resources. Instead, she has favored direct payments for low-income households, arguing that assistance could thereby be concentrated on those most affected. Previous research, she noted, indicated that the earlier fuel rebate disproportionately benefited higher earners, adding to concerns about whether a broad-based subsidy would efficiently target those in need.
Berlin measures tightened oversight as alternative relief plans emerge
Merz has also rejected proposals for a tax on excess profits earned by oil companies. Although he pointed to the Federal Cartel Office’s existing authority to investigate potentially abusive pricing practices, he acknowledged that consumers may regard the current oversight as insufficient when prices remain elevated. Nevertheless, he maintained that there was no adequate factual or legal basis for introducing an excess-profits tax, leaving the government opposed to one of the principal measures advocated by parts of the SPD.
Pressure for more intervention has nevertheless come from state leaders and opposition parties. Saarland Minister-President Anke Rehlinger (SPD) has reaffirmed her party’s support for a fuel-price cap and an excess-profits tax, arguing that extraordinary gains by oil companies could instead be used to ease the burden on motorists. The proposal draws partly on Luxembourg’s approach, under which maximum prices for heating oil, gasoline and diesel are adjusted in response to developments in international markets. The model has therefore become a reference point in the German debate over whether direct state intervention can shield consumers from rapidly changing energy costs.
The Greens favor a different strategy. Andreas Audretsch, a deputy leader of the parliamentary group, has rejected another fuel rebate while advocating a reduction of the electricity tax to the European minimum. In his view, the measure could deliver about one billion euros in direct relief to households while also supporting technologies such as heat pumps and electric vehicles. Audretsch has further argued that the previous fuel rebate demonstrated the risk that part of government-funded assistance could ultimately benefit oil companies rather than consumers, strengthening his preference for a measure whose benefits would flow more directly to households.
Parties offer diverging tax and subsidy options
The government has already introduced tighter rules governing fuel-price increases. Filling stations may raise prices only once a day, while price reductions remain unrestricted. In addition, oil companies are now required to justify price increases rather than leaving the Federal Cartel Office to establish anti-competitive conduct in the first instance. These changes are intended to strengthen oversight of pricing practices as consumers face elevated costs. Against this backdrop, and given the coalition’s stated financial limitations, another fuel-price rebate appears unlikely.
Several other options remain under discussion as policymakers weigh broad subsidies against more targeted forms of assistance. Claudia Kemfert, an energy expert at the German Institute for Economic Research (DIW), supports mobility or climate payments for households particularly affected by high costs, alongside proposals such as a fuel-price cap and lower electricity taxes. Under a DIW proposal, a mobility allowance would replace the commuter tax deduction with a fixed payment based on travel distance, avoiding the latter system’s greater benefits for higher earners. Reiche has similarly backed targeted direct payments for low-income households as a means of concentrating limited resources where they are considered most necessary.
The AfD supports permanently reducing fuel-related taxes and charges by lowering value-added tax, eliminating the carbon tax and bringing energy taxes closer to European Union minimum levels. The SPD and Left, meanwhile, favor an excess-profits tax, although economists question its ability to offset sharply higher crude-oil and refined-product costs and point to the difficulty of defining and identifying exceptional profits. Other proposals would shift relief away from fuel prices altogether, including a reduction in value-added tax on staple foods or the reintroduction of the nine-euro public transportation ticket. In Brandenburg, the CDU and SPD have also recently called for suspending the carbon price, adding another proposal to an increasingly broad debate over how the government should respond to higher energy costs.
