Energy Tax Cut Benefits Wealthier Households Disproportionately, Study Finds
Economy / Finance

Energy Tax Cut Benefits Wealthier Households Disproportionately, Study Finds

A simulation conducted by researchers at the RWTH Aachen University, and reported by “Der Spiegel”, suggests that the planned reduction of energy taxes on gasoline and diesel will benefit higher-income households disproportionately. According to the study, the top ten percent of earners are projected to save €21.64 over a two-month period, an amount three times greater than the €6.48 savings realized by the bottom ten percent. The key reason for this difference is that the researchers factored in the assumption that higher incomes are often linked to greater fuel consumption, causing wealthier individuals to benefit more substantially. For context, a single-person household earning nearly €4,500 net per month would fall into the highest income bracket, while one earning less than €1,200 would fall into the lowest.

Aaron Praktiknjo, an economist at RWTH, commented that the measure fails to be targeted. While acknowledging that he himself would be paying more at the pump, he added that he personally did not feel an urgent need for the proposed discount. Praktiknjo and his team based their figures on comprehensive data sources, including the Federal Statistical Office’s Income and Consumption Survey, the socioeconomic panel, the German Mobility Panel, and current fuel price data. The planned reduction in taxes amounts to approximately 17 cents gross per liter (equivalent to 14.04 cents plus VAT).