The fuel discount implemented by the German government starting May 1st is reportedly not being fully reflected at the gas pumps, according to new calculations released by the Ifo Institute.
Florian Neumeier, Deputy Director of the Ifo Centre for Economic Sciences, detailed the discrepancies, noting that in the first three days of the transition, fuel station operators passed on only an average of 4 cents of the 17-cent tax reduction for diesel. For regular gasoline (Super), the average transfer was significantly higher at 12 cents. Neumeier suggested that the limited transfer of the diesel discount might be related to Germany’s requirement to import diesel, or perhaps that the fuel purchased over the weekend was subjected to the full tax rate.
Neumeier further criticized the measure, arguing that even if the policy successfully lowered pump prices in the short term, it establishes incorrect incentives. Given the current supply shortage, the discount does not help encourage consumers to reduce their diesel or gasoline consumption. Additionally, the researchers point out that the discount lacks targeted effectiveness, as higher-income individuals, who tend to spend more overall on fuel, are therefore the ones who benefit the most.