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Household Dispute: Traffic Light Coalition Plans Kerosene Tax - E-Car Subsidies to End Earlier
After reaching an agreement in the budget dispute, the traffic light coalition government in Berlin is reportedly eyeing the abolition of certain fossil fuel subsidies as agreed in the coalition contract. According to Spiegel and DPA, there are considerations to tax previously tax-free kerosene on domestic flights. Additionally, there are plans to eliminate tax subsidies on diesel for agricultural and forestry businesses, the so-called agricultural diesel, which is an important factor for farmers. However, more significant subsidies, such as the general diesel or company car privileges, remain untouched. There is no mention of tailoring company car taxation to electric vehicles. On the contrary, the electric car premium is expected to expire earlier, with Economic and Climate Protection Minister Robert Habeck (Greens) leaving the timing open.
Furthermore, with the CO2 price rising from 30 to now 45, instead of the previous 40 euros per ton, regular fuel will also become slightly more expensive. According to ADAC calculations, the price per liter of gasoline could increase by 1.4 cents, and the price per liter of diesel by 4.7 cents compared to 2023.
"This has a steering effect towards climate-friendly alternatives," says the German Association of Energy and Water Industries (BDEW).
At the same time, it warns that these alternatives need to be present and financially attractive both in the transport and heating sectors. Regarding electromobility, this is not the case: electric vehicles are still significantly more expensive than combustion engines today. This problem will be further exacerbated by the immediate cessation of the environmental bonus that has also been decided upon. Therefore, an alternative approach needs to be considered urgently, says the BDEW.
Electricity for businesses could also become more expensive and even rise by up to 20 percent, as calculated by the German Chamber of Industry and Commerce. The BDEW warns that the decided cuts will lead to increases in energy prices, further burdening households, businesses, and industry in the coming year. The suspension of the federal subsidy for transmission network charges is feared to significantly increase electricity prices, according to the association. Additionally, the expiration of the energy price brakes for electricity, gas, and heat will also remove the safety net that has protected customers from excessively rising prices.
"Today was not a good day for the climate. After 191 nations at the climate conference in Dubai agreed in the morning to the phase-out of the fossil fuel industry, the leaders of the traffic light coalition in Berlin were only able to muster up a weak compromise for the climate. Instead of withdrawing tax gifts for higher income classes, the federal government is sacrificing important transformation projects for the debt brake," criticizes Sebastian Bock, managing director of the environmental umbrella organization Transport & Environment Germany.
By doing so, the federal government risks leaving future generations with a world of more climate extremes, dilapidated infrastructure, and a stagnating economy. Nevertheless, it is now important to quickly and correctly implement the few positive aspects of the compromise.
"The commitments for the charging infrastructure must now be rapidly implemented on the streets. Priority should be given to grid connections for trucks. If the expansion continues to be delayed, it will have dramatic impacts on the industry, logistics sector, and consumers. The sales of electric trucks would take a significant hit, particularly posing problems for German manufacturers," Bock further warns.
At the same time, the logistics sector, and thus consumers, would not benefit as quickly from the lower operating costs of electric trucks compared to combustion engines. Bock also criticized that despite all consolidation efforts, the two billion euros allocated in the federal budget for the construction and expansion of highways remain untouched.
"Many of these projects are approved purely for political reasons and cannot be justified scientifically or economically. They are simply a waste of taxpayers' money, which is urgently needed elsewhere," Bock judged.
On the other hand, there was praise for the introduction of a kerosene tax. This is important to reduce the price differences between train and air travel. However, even an ambitious tax rate as demanded by T&E would only bring an additional 330 million euros to our coffers.
"To tackle the fiscal crisis, Scholz and his cabinet must dare to tackle the major climate-damaging subsidies," appealed the NGO chief.
The aviation industry is currently still benefiting greatly from tax exemptions. The aviation tax must be raised to a level that covers the missing taxes that the industry does not currently pay. This would mean, for a ticket within the EU, that taxes would be raised from about 12 euros to 48 euros per passenger. Addressing this gap could generate an additional 5.98 billion euros annually for Germany, Bock calculates.
Translated automatically from German.
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