Solution in the budget dispute?
Economy: Abolish subsidies for diesel and kerosene
03/14/2023 10:13 am
There is disagreement in the traffic light government about the coming budget. Budget priorities and additional departmental demands are slowing down the Ministry of Finance. There is great savings potential, especially in the case of climate-damaging subsidies.
In view of the budget dispute in the traffic light coalition, the chairwoman of the Economic Wise Men, Monika Schnitzer, calls for a comprehensive reduction in subsidies. “Climate-damaging subsidies put a strain on the state budget and delay the transformation into a climate-neutral economy,” Schnitzer told the “Welt”. It is therefore obvious to think primarily of such subsidies in terms of economical budget management when it comes to reducing expenses.
With a view to the struggle in the coalition for the budget, Monika Schnitzer said it was “quite normal that everyone reports a high need”.
(Photo: IMAGO/Rainer Unkel)
Specifically, Schnitzer recommended “the abolition of the tax breaks for kerosene and for international flights,” as well as the tax breaks for diesel and for privately used company cars. The Council of Experts also viewed the distance allowance critically from a climate perspective, she pointed out.
Overall, the reduction of climate-damaging benefits could result in around 30 billion euros per year. Another low double-digit billion amount could be saved in the social sector, said Schnitzer. “In order to achieve a rapid reduction in spending, one could, for example, think about limiting future increases in mothers’ pensions.”
The economist also referred to tax breaks that would have lost their justification after the end of the pandemic. There are still discounts for gastronomy and hotels, which accounted for around four billion euros.
Great savings potential
The director of the German Economic Institute (IW), Michael Hüther, also advocated a comprehensive reduction in subsidies. “A subsidy that can be removed fairly quickly would be the tax exemption on fuel in domestic aviation,” he told the newspaper. The VAT exemption for international flights also harbors great savings potential, but an international regulation would have to be found for this. “The tax concession for diesel fuel must also be reconsidered,” said Hüther.
“One could cut back on social benefits and reconsider some things,” added the IW boss. Retirement at 63, for example, counteracts the problem of the shortage of skilled workers. The same applies to the mother’s pension.
Federal Minister of Finance Christian Lindner announced on Thursday that the cabinet decision on the budget key points for 2024 and the financial plan up to 2027, which was actually planned for this week, will be postponed. The background is the dispute in the traffic light government over the priorities of the budget and additional demands from the various departments of up to 70 billion euros.