Dec 5, 2023
Car Taxes Would Fix Germany’s €17 Billion Budget Gap, Environment Agency Says
, Bloomberg News
(Bloomberg) -- Germany can immediately fix its massive budget gap by eliminating more than €17 billion in tax breaks and benefits mainly for the auto sector, according to the nation’s environmental agency.
“We’d hit two birds with one stone: ease the budget crunch and keep climate action on track,” agency President Dirk Messner told Bloomberg.
Measures could include raising taxes on diesel fuel and eliminating tax breaks for wealthier motorists and company cars, he added. The steps are proposals at this point, and no decision has been taken.
German officials are racing to fix the country’s budget crisis after its top court last month ruled that a top-up of a climate fund with around €60 billion ($65 billion) outside the regular budget was unconstitutional. The government has suspended constitutional borrowing limits for a fourth year in a row by passing a supplementary budget for this year. In addition, the finance ministry has frozen additional spending for new projects that aren’t yet finalized.
Coalition parties need to reach a deal on the 2024 budget this week if they are to keep to the initial timetable for parliament to approve the revised budget plan before Christmas, according to a spokesman for Chancellor Olaf Scholz.
Read More: Scholz Sees Fast Progress in Talks to Solve German Budget Crisis
Other measures that could help fill the shortfall include introducing a jet fuel tax on domestic flights and raising taxes on meat and other animal products, according to Messner. Such steps could be implemented immediately, without European Union approval, he said. They are generally opposed by the auto sector.
The proposals find support among Germany’s Green Party. Cutting some of the privileges around company cars could rake in about €1.8 billion, the parliament group’s vice chair, Andreas Audretsch, told the RTL/ntv television stations. The main beneficiaries of the tax relief are people with large cars that cause major environmental damage, he added.
(Updates with reaction of Green party in final paragraph.)
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