Fight against high fuel prices: IW boss Hüther considers fuel discounts to be the wrong tool

As a measure against the sharp rise in fuel prices, the energy tax on fuels will be significantly reduced in the coming months starting tomorrow.

Fight against high fuel prices: IW boss Hüther considers fuel discounts to be the wrong tool

As a measure against the sharp rise in fuel prices, the energy tax on fuels will be significantly reduced in the coming months starting tomorrow. The director of the Institute of German Economics criticizes the tank discount as a regulatory error.

The director of the Institute of German Economics (IW), Michael Hüther, has criticized the fuel price reduction as a regulatory error and the wrong instrument against high fuel prices. "In terms of regulatory policy, politics should only intervene in the market if the price increase is due to abusive market power," Hüther told the "Augsburger Allgemeine". In principle, watering can effects are "bad and intervention in pricing should always be the last resort of politics".

From Wednesday, the energy tax on fuels will be significantly reduced for three months. The tax rates for petrol will drop by 29.55 cents per liter and for diesel by 14.04 cents. The measure is part of the federal government's relief package, because fuel prices have risen sharply in recent months.

Against this background, Hüther also recalled the social-liberal coalition under SPD Chancellor Willy Brandt in the 1970s, at the time of the oil crisis. "Even the SPD under Brandt was against cutting taxes and levies," said the IW boss. "Consumption restrictions were accepted because one did not want to torpedo the forces of the market economy."

Above all, the IW boss criticized the lack of targeting of the tax cut. "A tank discount is neither effective in terms of distribution policy, since it relieves the burden regardless of need, nor is it accurate in terms of company or industry policy," said Hüther. In addition, the measure leads to additional bureaucratic costs.

The transport industry itself also rejects the subsidy. "We said from the beginning that our industry would miss it," said the head of the Federal Association of Freight Transport and Logistics (BGL), Dirk Engelhardt, of the "Augsburger Allgemeine". "The 17 cents bring us nothing." In view of price increases of a third within a year in the transport industry, Engelhardt instead called for targeted subsidies for hauliers, such as those granted by the state during the corona pandemic.