Germany's government has come up with an action plan for reducing financial burdens related to the fuel crisis centred on fuel tax cuts and a 'relief bonus' scheme for employees.
On Friday the Bundestag greenlit the government's so-called 'fuel discount' as well as the plan to offer tax-free relief bonuses.Â
Both measures are aimed at relieving consumers from sky-high fuel prices, which rose sharply at the end of February, triggered by the start of the US and Israel's war on Iran, and have remained high ever since.
But it remains unclear exactly how much money these policies will save people living in Germany. Economic experts and institutes have questioned if the fuel tax cut will really be passed on to customers in full, and employers associations doubt that many companies can afford to pay out additional bonuses.
Here's a look at how much money these measures could realistically save you if you live, or drive, in Germany.
Taxes cut
Starting from May 1st to the end of June, energy taxes on diesel and gasoline sold in Germany are to be reduced by 16.7 cents per litre gross.
But that doesn't mean that drivers will see petrol prices drop by 16.7 cents immediately on May 1st.
ADAC's fuel market expert, Christian Laberer told the German Press Agency (DPA) that an immediate fall in prices "should not be assumed".
"That was not the case in 2022 either," Laberer explained, referencing a similar reduction on energy taxes that came in response to the energy price shock that followed the outbreak of Russia's war on Ukraine. "Instead, prices fell successively."
In 2022, the Liebniz Institute for Economic Research (RWI), and others, ultimately came to the conclusion that only part of the fuel tax rebate reached consumers. The measure was therefore criticised by some as a gift to oil companies at taxpayers' expense.Â
Assuming fuel price savings are passed on, prices will still vary between petrol stations.
The Fuels and Energy Trade Association suggests that the full tax savings should be passed on to German consumers, but added that this could also be overshadowed by other price developments.
READ ALSO: How to save money on fuel in Germany as prices hit all time high
How much can drivers in Germany really expect to save?
A 16.7 cent per litre reduction at the pump is significant, but wont put Germany's fuel prices back to pre-war levels.
On the last day before the outbreak of war at the end of February, a litre of Super E10 cost €1.778 and a litre of diesel cost €1.746.
According to the ADAC, the nationwide daily average on Thursday was €2.074 per litre of Super E10, and €2.150 for diesel. So around 30 and 40 cents more than before the start of the war respectively.
Based on figures from the Federal Motor Transport Authority, the fuel cost reduction, if it arrives in full, would amount to a savings of around €33 over the course of the two months for drivers of diesel vehicles, and about €21 for drivers of gasoline cars.
These estimates are based on the average number of kilometres driven each year by drivers in Germany well as average fuel efficiency figures for both diesel and gasoline vehicles.
Will non-drivers benefit?
By virtue of explicitly making fuel cheaper, drivers – and especially drivers of vehicles that are not very fuel efficient, like SUVs – stand to see the most savings from the fuel tax reduction.
People who drive electric cars, or who don't drive at all, will not benefit directly from the relief.
However, lower fuel costs can be expected to trickle down through the broader economy and keep other costs lower to some extent. For example, lower fuel costs for ground transportation also helps to keep the cost of groceries and consumer goods from rising as sharply.
Tax-free premium
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. It is to be discussed in the Bundesrat on May 8th.
This is to be a voluntary benefit from employers.
Business associations have so far reacted sceptically. President of the German Chamber of Industry and Commerce (DIHK), Peter Adrian, said that the scheme raises a broad expectation for bonus payments from employees, but that many companies would not be able to afford them.
Q&A: Who will get Germany's tax-free bonus?
With reporting by DPA.
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