(de-news.net) – After discussions with representatives of Germany’s states, the Federal Government has agreed on measures intended to ease the burden of elevated fuel prices. According to multiple media reports, the package will combine a fuel discount of up to 17 cents per liter, scheduled to take effect in early October, with a fuel price cap planned for the beginning of 2027. A reduction in value-added tax on the good, which had previously been under consideration, is not included in the agreement.
The proposed fuel discount is estimated to cost about 2.5 billion euros. Under the arrangement, the Federal Government would reduce the energy tax on gasoline and diesel by 14 cents per liter through the end of 2026. Once value-added tax is taken into account, the resulting reduction would amount to 17 cents per liter. The measures follow several days of discussion over how the government should respond to persistently high fuel prices and the resulting pressure on consumers.
The federal and state governments plan to jointly ease the burden on households and businesses caused by elevated fuel prices, according to the government. By January 1, 2027, at the latest, a fuel price cap modeled on measures used in Luxembourg or Belgium is also planned. Unlike a permanent price-control mechanism, however, it is intended as a crisis instrument, with the government entering regular discussions with the mineral oil industry to prepare for its use.
The measures now approved are expected to have a total relief volume of 2.5 billion euros. The states are to cover 50 percent of the costs. Federal Finance Minister Lars Klingbeil (SPD) said the federal share would be financed from unspent funds in the 2026 budget.
Critics question fuel discount as EU rejects windfall tax proposal
The proposed relief has also prompted criticism from the Greens. According to press accounts, energy-policy spokesman Michael Kellner characterized another fuel discount as misguided and questioned whether the intended savings would actually be passed on to consumers in full. In his view, the market position of oil companies could affect how much of the reduction reaches drivers, while direct payments to households would provide a more targeted form of assistance. Kellner also contrasted the proposed support for gasoline and diesel with reductions in family-related benefits, highlighting what he regarded as a different approach to government relief.
Reiner Holznagel, president of the Taxpayers’ Association, has similarly questioned whether the planned measures would deliver lasting benefits. He has called instead for targeted and durable forms of relief, arguing that expensive short-term interventions can leave uncertainty over how much assistance ultimately reaches consumers. Previous tax reductions, he maintained, had shown that lower taxes did not necessarily translate into equivalent savings for drivers at the pump. Holznagel therefore supports a higher commuter tax allowance, which would direct relief more specifically toward people who travel to work, as well as stronger competition and more rigorous antitrust enforcement. High diesel prices, he also noted, have consequences beyond motorists because they can increase the cost of goods and services.
Meanwhile, the European Commission has rejected Finance Minister Klingbeil’s proposal for a Europe-wide windfall tax on oil companies. Speaking at a meeting of EU finance ministers in Dublin, Economic Commissioner Dombrovskis said the Commission was monitoring developments and could respond if circumstances warranted, but would not present a Europe-wide proposal at this stage. Klingbeil had argued that such a levy could channel profits generated by oil companies during the crisis back to consumers, linking the European-level proposal to the broader debate over how the effects of high fuel prices should be distributed.
