German gvt spends more on petrol tax cut in 2 months than on flat-rate transport ticket in a year - welfare group

The German government’s two-month tax rebate on petrol and diesel will cost the federal budget more than its annual contribution for financing the country’s nationwide public transport ticket, social advocacy organisation VDK has said. The crisis response measure, designed to ease cost pressure for users of combustion engine cars following the Iran war price shock, would fail to support large parts of the population, the welfare organisation with more than two million members warned, adding that a large part of the fossil fuel subsidy would end up in the hands of multinational corporations rather than citizens. 

The government in mid-April announced a temporary tax cut on petrol and diesel of 17 cents per litre for May and June this year. Environmental groups, industry representatives and economists criticised the measure for being poorly targeted and creating the wrong incentives. The motorist-only measure could cost up to 1.6 billion euros, while the federal government’s 2025 contribution to the “Germany Ticket,” which gives users access to public transport across the country for twelve months, stood at 1.5 billion euros. Germany's 16 states contribute a further 1.5 billion euros to the flat rate-ticket, which currently costs 63 euros per month. 

“The planned reduction in energy tax is being presented as relief for consumers. However, it is entirely unclear whether this relief will actually reach those who need it most,” said VDK president Vera Bentele. “The lowest income groups rarely benefit from this,” she argued, adding that a similar measure following the 2022 energy crisis had resulted in large parts of the money flowing to fossil fuel companies. “Affordable and reliable public transport - for example through a permanently cheap Germany Ticket - could provide real relief by cutting fuel use in the short-term and giving access to climate-friendly mobility in the long term,” Bentele said. 

Bentele said direct payments tailored to income and adjustments to basic social security payments would have been a more adequate response to the social hardship caused by the latest energy crisis. Moreover, the poorest households often do not even own a car, she added. 

The rebate on petrol and diesel fuel was the first major government response to the fossil fuel price hike triggered by the US- and Israeli-led attack on Iran. Energy prices are expected to stay elevated at least in the near term due to widespread damage to energy infrastructure in the Persian Gulf region and a blockade of the Strait of Hormuz shipping lane, a bottleneck for a significant share of global oil and gas trade.