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High fuel costs: Söder wants lower VAT on gasoline

CSU boss Markus Söder has spoken out in favor of lowering the value added tax on gasoline in view of rising energy prices. “When it comes to gasoline, we should consider whether we can temporarily reduce the value added tax to the reduced rate,” Söder told the newspapers of the Funke media group.

A capped industrial electricity price should be introduced for the economy. In addition, the EEG surcharge for green electricity subsidies would have to be reduced to zero and the electricity tax to a European minimum, said Bavaria’s Prime Minister. He recently called on the coalition negotiators of the SPD, Greens and FDP to reduce VAT on energy and fuels.

Significant price increase

The value added tax on gasoline is currently 19 percent. The reduced rate of 7 percent is applied to groceries, books and tickets for local public transport, among other things.

Last Tuesday (November 2nd) the gasoline price reached an annual high, according to ADAC. A liter of Super E10 therefore cost a nationwide average of 1.680 euros, after 1.675 euros in the previous week. That was the highest value in more than nine years. According to ADAC, the previous record of 1.709 euros came from 2012. The price of diesel has also continued to rise recently.

In October, according to preliminary data from the Federal Statistical Office, the total cost of energy rose sharply by 18.6 percent within a year. The rise in prices thus accelerated. Rising energy prices have been fueling inflation for some time. In addition, the withdrawal of the temporary VAT cut is having an impact. Regular VAT rates have been in effect again since January 2021, so goods and services are tending to become more expensive again. In addition, there are material shortages and delivery bottlenecks as well as the CO2 tax. Since the beginning of the year, 25 euros per tonne of carbon dioxide that is produced when diesel, gasoline, heating oil and natural gas are burned have been due.

Medium-sized companies for halving

For years, rising fuel prices have repeatedly triggered a debate about tax cuts and government interventions such as price caps. A large part of the fuel price at the pump are petroleum tax, VAT and the price of CO2.

Economists argue that a mere tax cut does not automatically lead to lower fuel prices. Lower taxes could even encourage oil companies to raise prices more strongly – in order to then benefit from them. Critics of government intervention also point out that high oil prices strengthened incentives for economical consumption. It is also a fallacy that high fuel prices at least lead to higher VAT revenues. After all, every euro can only be spent once.

The middle class is calling for a temporary halving of the mineral oil tax. “To quickly relieve the burden on companies and private consumers, the mineral oil tax should be temporarily halved and the commuter allowance increased noticeably,” said the federal manager of the Federal Association of Medium-Sized Businesses, Markus Jerger, to the newspapers of the Funke media group. Jerger refused to abolish the commuter allowance. (dpa / swi)

Also read:

New diesel record: no relaxation in fuel prices

“State must not be the main beneficiary”: Scheuer – New government must prevent high fuel prices

Because fuel is scarce: the British are suddenly hunting for electric cars

From the data center:

Change in market share by drive type in Germany in October 2021

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Lenny Li

I started to play with tech since middle school. Smart phones, laptops and gadgets are all about my life. Besides, I am also a big fan of Star War. May the force be with you!

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