Germany's fuel tax rebate benefits high‑mileage drivers

A fuel tax rebate that lowered the energy tax by up to 17 cents per litre was introduced in Germany on 1 May and is set to expire on 30 June. The measure was intended to ease the impact of sharply higher fuel prices caused by the Iran war.

Analysis by the ifo Institute shows that most of the €1.6 billion of tax relief is being passed on to oil companies, with an average pass‑through of 12 cents per litre for diesel, 16 cents for Super E5 and 15 cents for Super E10. Consequently, frequent drivers and owners of high‑consumption cars receive the greatest benefit, while low‑income commuters receive comparatively little.

The German government has said a decision on extending the rebate will be made before the end of June, despite recent declines in pump prices. Critics accuse oil firms of having raised prices before the rebate took effect to profit from the reduction.