During a meeting of the Coalition Committee over the weekend, the leaders of the CDU, CSU, and SPD agreed upon an immediate energy relief package. The central focus of the federal government’s efforts, according to the draft decision published Monday morning, is to lower fuel prices for consumers. In total, consumers are expected to receive relief of approximately 1.615 billion euros on fuel costs. This will be achieved by temporarily reducing the energy tax on both diesel and gasoline by about 17 cents gross per liter, a measure set to last for two months.
In this context, there was welcome acknowledgement of the European Commission’s intention to examine measures targeting the oil industry, similar to the 2022 EU energy crisis contribution. The necessary funding for these tax reductions is stated to come from “measures secured through competition or tax law against oil industry companies”.
Furthermore, the coalition intends to strengthen competition law. As part of planned amendments to the German Act Against Cartels (GWB), the Federal Cartel Office’s operational scope will be expanded. It will gain the ability to collect data from stages preceding consumer delivery, allowing for quicker detection of abusive practices. To provide this required data, the industry companies will be obligated to cooperate.
Looking toward the longer term, the coalition also aims to broaden the energy supply to reduce dependencies in the energy sector. This includes utilizing domestic energy sources, such as developing “select domestic gas reserves”. Additionally, efforts will be made to accelerate the expansion of renewable energy. Investments will also be made to expand electricity grid connections with neighboring European countries.
Federal Chancellor Friedrich Merz (CDU), however, acknowledged that the state cannot absorb all shocks from global politics. He noted that “this support is limited to two months”. After this period, the previous tax rates will automatically resume. Merz stated that this means, candidly, that prices will likely rise again, and the prices will fluctuate even within those two months.
Beyond the immediate energy measures, further relief for employees is planned. In 2026, employers will be permitted to offer a tax- and contribution-free relief bonus of 1,000 euros. To counterbalance the projected loss in tax revenue, the tobacco tax will be increased starting in 2026. By the beginning of 2027, the coalition plans to implement a “major reform” of the income tax to provide lasting relief for low and middle-income earners.
Regarding the planned reform of the statutory health insurance, the coalition has not made final decisions but has set a timeline. The government plans to pass the corresponding draft law on April 29th, aiming to complete the legislative process before the start of the parliamentary summer recess.
