The fuel discount implemented by the federal government as of May 1st is not reaching the pumps in its entirety, according to recent calculations by the Ifo Institute. Florian Neumeier, Deputy Head of the Ifo Centre for Financial Science, noted that in the first three days, gas stations passed on only an average of 4 cents of the 17 cent tax reduction per liter for diesel. For premium gasoline, the average transfer of the 17 cent tax reduction was 12 cents. Neumeier suggested that the limited transfer of funds for diesel might be related to Germany’s reliance on diesel imports, and that fuel purchased over the weekend likely remained subject to the full tax rate.
Furthermore, Neumeier argued that even if the policy has achieved a short-term reduction in gasoline prices at the pumps, it sets the wrong incentives. Given the current scarcity of supply, this measure does not help in reducing diesel or gasoline consumption. The researchers also observed that the discount lacks precision, as individuals with higher incomes tend to have higher fuel expenditures and thus benefit more significantly from the price reduction.
