Germany to Approve New Fuel Tax Cut From October 1

Germany plans to approve a new cut in gasoline and diesel taxes on Monday and introduce the measure on October 1, the Finance Ministry said.

The government will reduce fuel taxes by €0.17 per litre, with the measure expected to cost federal and state governments about €2.5 billion. The draft legislation was completed over the weekend and is expected to pass both houses of parliament later this week.

The government says it plans to recover the cost through a tax on excess profits earned by energy companies. Finance Minister Lars Klingbeil has backed such a windfall tax, while Chancellor Friedrich Merz and Economy Minister Katherina Reiche have opposed it, highlighting tensions within the governing coalition.

The new relief comes as oil prices have risen above $100 a barrel amid the conflict in the Middle East and disruptions to major supply routes.

Germany introduced an earlier fuel discount in May and June, costing about €1.6 billion. Inflation eased during the period but rose again after the measure expired, with energy inflation increasing to 8.3% in July from 3.4% in June.