Due to high gasoline prices, the federal government collected approximately half a billion euros more in value-added tax (VAT) in March, according to calculations from the Rhine-Westphalian Institute for Economic Research (RWI). This was reported by “Bild” (Thursday edition), citing an analysis from the RWI’s “Environment and Resources” department.
The institute suggests that daily VAT revenue was boosted by over twelve million euros due to the rise in diesel prices, totaling 360 million euros for the entire month. Similarly, the monthly surplus from gasoline accounted for around 130 million euros.
Manuel Frondel, the head of the RWI department, advocated for eliminating VAT on gasoline. Frondel told the newspaper that the government should not benefit from rising fuel costs and that VAT on fuels should ideally be completely abolished in the medium term. He argued that the state already gains revenue from the anticipated increase in carbon dioxide pricing on fossil fuels, making it “hard to justify” that VAT revenue would increase simultaneously.
However, the Federal Ministry of Finance, led by Lars Klingbeil (SPD), contradicted the RWI’s findings. The ministry stated that the high gasoline prices would actually lead to decreased overall consumption, thereby preventing an increase in VAT revenue.
