BERLIN, April 24 (Reuters) - Germany's lower house of parliament on Friday approved a relief bonus of up to 1,000 euros ($1,169.30) for workers as part of a package to cushion the impact of high gas
German parliament approves relief bonus, fuel discount to tackle energy crisis
Germany's Response to the Energy Crisis: Relief Measures and Economic Impact
By Maria Martinez and Christian Kraemer
Parliament Approves Relief Package
BERLIN, April 24 (Reuters) - Germany's lower house of parliament on Friday approved a tax-free relief bonus of up to 1,000 euros ($1,170) for workers and a fuel discount for May and June as part of a package to cushion the impact of higher petrol prices due to the Iran war.
Government's Commitment to Citizens
"That is an important signal to citizens that we are not leaving them on their own in this crisis, that we are providing relief even in difficult times," German Finance Minister Lars Klingbeil said in parliament.
Fuel Discount Details
The energy tax on diesel and petrol will be cut by about 0.17 euros per litre for two months. Whether pump prices actually fall by that amount depends on oil companies.
Ensuring Relief Reaches Consumers
"We will watch very closely to ensure that the companies pass on this relief and do not enrich themselves with the money we are making available," Klingbeil said.
"We have competition law for that, we have political pressure for that, and we also have a critical public for that."
After the decision by the lower house of parliament, the fuel discount measure was also approved by the upper house.
The fuel price relief for consumers and businesses is worth 1.6 billion euros.
Criticism and Additional Measures
Economists' Concerns
Some economists have criticised this type of measure, saying governments should provide tightly targeted aid to vulnerable households instead.
Windfall Tax on Energy Companies
Klingbeil has advocated for a tax on energy companies' windfall profits in reaction to rising fuel prices and said he had constructive talks with the European Commission on this topic this week.
"There are currently companies making profits during a severe crisis," the minister said.
Worker Relief Bonus
Details of the Bonus
GERMANY APPROVES WORKER RELIEF BONUS
The lower house of parliament also approved a relief bonus of up to 1,000 euros for workers, which employers can pay until June 30, 2027.
The one-off payments will be tax-deductible for employers and tax-free for workers.
Implementation Challenges
The bonus is voluntary, spurring uncertainty over how many companies will take part amid a weak economic economic backdrop.
The governing coalition estimates the measure will cost at least 2.8 billion euros in lost tax revenue. To help fund the measure, the tobacco tax is due to rise this year.
Comparison to Previous Relief
Germany introduced a similar tax-free bonus of up to 3,000 euros during the 2022 energy crisis that followed Russia's full-scale invasion of Ukraine.
Business groups have criticised the government for shifting the burden of supporting households to employers.
Economic Outlook and Structural Challenges
Coalition Tensions and Economic Forecast
The new energy price crisis has again laid bare cracks in the German government coalition and the difficulty in mastering two challenges at the same time: providing short-term relief from high energy prices and pressing ahead with longer-term structural reforms, Carsten Brzeski, global head of macro at ING, said.
German business morale fell in April to the lowest level since May 2020, and Germany's economy ministry this week halved its growth forecast for 2026.
Future Prospects
If the fiscal stimulus on infrastructure and defence is combined with long-overdue structural reforms, then the economic upswing "will only be delayed, not derailed," Brzeski said.
($1 = 0.8552 euros)
(Reporting by Maria Martinez and Christian Kraemer, editing by Friederike Heine, Thomas Seythal and Andrew Heavens)
