German parliament approves new fuel tax cut to counter soaring prices

The German parliament on Friday approved a fuel tax cut aimed at easing the burden on motorists as prices at the pump soar due to the war in Iran.

Taxes on petrol and diesel are to be cut by a total of 17 cents ($0.19) per litre from October 1 to December 31.

After months of hesitation, German Chancellor Friedrich Merz last week finally agreed to take action to support motorists, following a renewed run of record fuel prices and amid plummeting ratings for his government.

The measure has been criticized as a gift for oil companies, with experts instead calling for targeted support for those with low incomes.

Stefan Korbach, financial affairs spokesman for Merz's Christian Democrats, defended the fuel rebate as "the best instrument available" to tackle high prices "at short notice."

The government has also agreed to introduce a temporary cap on fuel prices by January 2027 at the latest, aimed at limiting the scope for oil companies to raise prices.

Opposition lawmakers criticized the plans, with the Greens' parliamentary leader Katharina Dröge describing the fuel rebate as "a daft solution."

She noted that a similar reduction implemented in May and June had not been fully passed on to consumers, as prices are still dictated by oil companies.