The Bundestag passed the government's proposed fuel discount to relieve fuel prices on Friday. This will reduce taxes on diesel and gasoline by around 17 cents per litre from the beginning of May to the end of June.
The Bundestag also paved the way for a tax-free 'relief bonus' of up to €1,000, which employers can pay to employees until June 30th, 2027.
Both measures still need to be approved by the Bundesrat, or Germany's Upper House, but are expected to be passed and written into law quickly.
Since the beginning of the US and Israel's war on Iran at the end of February, fuel prices have risen sharply and remain far higher than they were before the outbreak of the conflict.
The Bundesrat was set to deliberate on the reduction in energy tax rates on Friday afternoon.
The measure is expected to cost the state around €1.6 billion.
The energy tax on diesel and gasoline is to fall by 17 cents per litre on May 1st. The measure is limited to two months.
Meanwhile the 'relief bonus' scheme will enable employers in Germany to offer a one-off tax-free bonus to employees if they chose to do so.
The Bundesrat is set to deliberate on this proposal on May 8th.
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The measures come as Germany's federal government, comprised of the conversative CDU/CSU and the centre-left SPD parties, looks to cushion financial burdens on consumers, and especially those affecting motorists and industry. But since the proposals were first announced in mid-April, they have been met with criticism from both lawmakers and experts.
The DIW economic institute has warned that much of the fuel tax cut may not be passed on to consumers.
This critique was also recently voiced by lawmakers from within the ranks of the federal coalition. For example, CDU politician Tilman Kuban had received applause from members of both the CDU/CSU and SPD groups in the Bundestag last month when he said, "A fuel discount is no help. Such a fuel discount is corporate funding..."
Employers' groups have also voiced criticism of the relief bonus plan. The president of the German Retail Association warned that the policy essentially passes the burden onto businesses - businesses that are already struggling under the weight of heightened costs.
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