Poland and Germany lower fuel taxes in response to the oil shock

The two largest economies in the European Union announced on Monday new decisions to reduce the taxation of fuels in an attempt to soften the blow from the rise in oil prices caused by the conflict in the Middle East. Poland is extending the reduced excise duty until the end of April, and Germany has adopted a package of tax breaks worth 1.6 billion euros.

Poland extends the "Fuel prices - lower" package

The Polish Ministry of Finance announced on Monday that the reduced excise rates on gasoline and diesel will remain in force until April 30. The lower excise duty, introduced by a decree of March 28, was initially supposed to be in effect only until April 15. The tax was lowered to the minimum permissible levels according to EU rules - by 29 groszy per liter of gasoline and 28 groszy per liter of diesel fuel.

The reduced VAT rate on motor fuels - from 23% to 8% - is also maintained until the end of April. According to calculations, the total losses for the budget from the lower VAT amount to about 930 million zlotys, and from the reduced excise duty - to about 750 million zlotys. Finance Minister Andrzej Domanski stressed that the decision was motivated by "the continuing unstable situation on the fuel markets, caused by the conflict in the Middle East".

German tax relief package of 1.6 billion euros

Chancellor Friedrich Merz announced on Monday morning, after coalition negotiations held over the weekend, a temporary reduction in excise duty on gasoline and diesel by about 17 euro cents per liter for a period of two months. According to Bloomberg data, the package of measures is worth 1.6 billion euros and also includes a one-off, non-taxable bonus for workers in the amount of 1000 euros.

According to Labour Minister Berbel Bass, the total volume of relief is aimed at both households and businesses. It is planned that the costs of the reduced tax will be partially offset by raising the excise duty on tobacco products and by antitrust measures against the large oil companies. Critics, however, note that support for owners of internal combustion engine cars is poorly targeted and does not reduce the country's dependence on fossil fuels.

The European Commission is preparing the next steps

The actions of Poland and Germany fit into a wider European trend. On April 22, the European Commission plans to present a proposal to reduce energy taxes and network fees throughout the EU. The finance ministers of five countries - Germany, Spain, Italy, Portugal and Austria - have already called on the Commission to consider the introduction of a pan-European tax on the super-profits of energy companies.

Meanwhile, oil prices have once again exceeded the $100 per barrel threshold amid the lack of a peace agreement and continued violations in traffic through the Strait of Hormuz. In this context, national tax breaks on fuels are becoming the first line of defense for consumers and businesses, while the EU is seeking a more coordinated response to the energy crisis.