Coalition's Relief Package: Easing the Burden on Drivers and Workers

Following extensive negotiations, the coalition has agreed upon a relief package designed to address the sharp increase in fuel prices, exacerbated by the conflict in Iran. The plan includes several key measures to support both consumers and employees.

Fuel Price Relief

For a limited period of two months, consumers and businesses will see a reduction in fuel taxes. The volume of this relief is estimated at approximately 1.6 billion euros. Specifically, the energy tax on diesel and gasoline will be lowered by roughly 17 cents gross per liter for these two months. Chancellor Friedrich Merz expressed his expectation that oil companies will pass this saving on to consumers.

Employee Relief Bonus

Employers will have the option to offer their employees a tax- and contribution-free relief bonus of up to 1,000 euros this year. This measure is reminiscent of a similar bonus provided during the energy crisis of 2022. To offset the resulting decrease in tax revenue, the coalition plans to increase tobacco taxes in 2026.

Income Tax Reform

The coalition is also committed to implementing a permanent income tax reform by January 1, 2027. This reform aims to provide noticeable relief for individuals and families with small to medium incomes.

Strengthened Cartel Authority

In an effort to combat potential price gouging by mineral oil companies, the government intends to expand the powers of the Federal Cartel Office. This will include granting the authority the ability to collect more data, enabling them to more swiftly identify and address any abusive market behavior.

Addressing Health Insurance Deficits

The coalition is also taking steps to address the significant deficits within statutory health insurance funds. Projections indicate substantial funding gaps in the coming years. The primary focus will be on expenditure adjustments to sustainably stabilize contribution rates and align expenses with revenues. A draft law concerning these measures is expected to be approved on April 29th, with the legislative process intended to conclude before the parliamentary summer recess.

Coalition Stability

Despite some public disagreements during the negotiations, Chancellor Friedrich Merz has stated that he does not believe the coalition's stability is threatened. He emphasized the importance of ceasing public debates and continuing to work constructively, which he believes was achieved over the weekend.