BERLIN (AP) – The German government said Thursday it would water down a cost-cutting plan that has infuriated farmers, abandoning a proposed repeal of a car tax exemption for farm vehicles and phasing out cuts to agricultural diesel tax breaks. did. .
The cuts were part of a package agreed last month by leaders of Prime Minister Olaf Scholz's unpopular three-party coalition to plug a 17 billion euro ($18.6 billion) hole in the 2024 budget.
Farmers staged a tractor protest in Berlin this month, calling for further demonstrations, and even Agriculture Minister Cem Ozdemir voiced opposition to implementing sweeping cuts. He said farmers have no alternative to diesel.
Kobenz, Rhineland-Palatinate, 22 December 2023: Hundreds of tractors from Rhineland-Palatinate took part in a protest march in Koblenz, which also drove along the banks of the Mosel River. Farmers are protesting the federal government's plans to scrap tax cuts. Photo: Thomas Frey/dpa (Photo by Thomas Frey/picture Alliance via Getty Images)
Germany's highest court has reversed a decision to repurpose 60 billion euros (about $66 billion), originally intended to alleviate the impact of the coronavirus pandemic, to fight climate change and modernize the country. As a result, it became necessary to review the budget. This maneuver violated strict self-imposed limits on debt growth that Germany had imposed.
According to a government statement on Thursday, Scholz, Deputy Prime Minister Robert Habeck and Finance Minister Christian Lindner will maintain the motor vehicle tax exemption for agricultural vehicles to save “sometimes significant bureaucratic efforts” for those involved. He said he agreed.
He added that the diesel tax cut would no longer end all at once, giving farmers “more time to adapt”. This year there will be a 40% reduction and a further 30% reduction over the next two years.
“We have found a good solution that avoids an undue burden on agriculture. You know that I have always warned against this,” Ozdemir told reporters in Berlin.
But the German Farmers' Association said the government's change in direction was not enough and it would stick to its planned protests.
“This is just a first step,” Joachim Lukwied, the company's chairman, said in a statement. “Our position remains unchanged. Both proposed cuts need to be taken off the table.”
Bendorf, Rhineland-Palatinate, December 22, 2023: Farmers drive tractors in rows on the A48 motorway. More than 400 tractors from Rhineland-Palatinate took part in a protest march in Koblenz, temporarily blocking traffic on the A48 motorway bridge in Bendorf, according to police reports. Farmers are protesting the federal government's plans to scrap tax cuts. Photo: Thomas Frey/dpa (Photo by Thomas Frey/picture Alliance via Getty Images)
BERLIN, GERMANY – DECEMBER 18: Aerial view of farmers protesting with tractors at the Brandenburg Gate against state subsidy reduction plans aimed at reducing fuel costs, on December 18, 2023 in Berlin, Germany . In the revised federal budget for 2024, the government plans to cut subsidies as part of broader cost-cutting measures following a Constitutional Court ruling earlier this year that caused a budget crisis that left a €17 billion hole in 2024. It is standing. (Photo by Christian Ender/Getty Images)
Other aspects of the budget deal included an abrupt end to subsidies for new electric vehicle purchases that were originally scheduled to last until the end of this year. Habeck's Ministry of Economy announced that he will close new applications within two days from the notification.
The government also raised Germany's tax on carbon dioxide emissions from fuels earlier this year than previously planned, which is expected to affect the prices of gasoline, diesel, natural gas and kerosene.
The price of CO2 will now be 45 euros (about $49) per tonne of emissions, up from 30 euros previously. The government had planned a small increase to 40 euros before the budget verdict.
