Germany Announces Energy Tax Reduction and Corporate Subsidies for Workers Amid Soaring Oil Prices
On April 13, the German government announced short-term economic measures to address soaring oil prices. These include a two-month reduction of approximately 17 euro cents per liter in energy tax for gasoline and diesel, and allowing companies to provide tax-exempt and social insurance-exempt subsidies of up to 1000 euros to employees as a 'crisis allowance'. To compensate for the fiscal deficit, Germany plans to advance the tobacco tax increase to 2026 and supports the European Union's evaluation of an 'excess profits tax' on oil companies. The Labor Minister stated that these measures are expected to reduce fuel costs for consumers and businesses by a total of approximately 1.6 billion euros. The Chancellor emphasized plans for further tax reforms targeting middle and low-income individuals.
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- 📰 Published: April 13, 2026 at 18:25
- 🔍 Collected: April 13, 2026 at 18:31 (6 min after Published)
- 🤖 AI Analyzed: April 13, 2026 at 18:39 (7 min after Collected)
On April 13, the German federal government announced a package of relief measures in response to high oil prices. The plan includes reducing the energy tax on diesel and gasoline by approximately 17 euro cents per liter for a period of two months. Labor Minister Bärbel Bas stated that this measure is expected to reduce fuel costs for consumers and businesses by about 1.6 billion euros in total, with oil companies expected to pass on the tax reduction benefits to consumers. Chancellor Friedrich Merz urged oil companies to fully reflect the tax reduction in end prices. Additionally, the federal government will permit employers to issue tax-exempt and social insurance-exempt 'crisis allowances' of up to 1000 euros to employees this year to help with rising energy costs. This aims to increase employees' real income while reducing the burden on companies. To compensate for the fiscal deficit caused by the energy tax reduction and subsidies, Germany plans to raise tobacco tax earlier in 2026 and supports the EU's assessment of an 'excess profits tax' on oil companies. The federal government indicated that funding for these relief measures will be sourced from the energy industry through tax or competition law mechanisms. German oil prices have been soaring since shipping disruptions in the Strait of Hormuz. Germany levies higher energy taxes and an additional 19% VAT on fuel compared to other EU countries, using a floating price system. This has led to 'fuel tourism' where drivers cross borders to refuel. A new system implemented on April 1, allowing gas stations nationwide to adjust prices only once a day at noon to reduce volatility and increase transparency, has proven ineffective. During the Easter period last week, the average diesel price across Germany reached a historical high of approximately 2.48 euros per liter. Chancellor Merz emphasized that these current measures are just the beginning, with further tax reforms for middle and low-income individuals planned to enhance governance efficiency and fairness.