German government announces tax relief measures amid rising fuel prices

On Monday, April 13, German Chancellor Friedrich Merz announced a government package designed to mitigate the economic impact of the conflict in the Middle East. The central measure is a two-month reduction of the fuel tax by 17 cents per liter, estimated to cost the state 1.6 billion euros. Labor Minister Bärbel Bas confirmed the total relief figure, while the government also authorized employers to provide staff with a tax-free bonus of up to 1,000 euros in 2026. To offset the resulting tax revenue deficit, the government plans to increase tobacco taxes starting this year. These decisions followed intense negotiations between coalition partners, including Finance Minister Lars Klingbeil and Economy Minister Katerina Reiche. Chancellor Merz stated that while resources are limited, the government intends to maintain economic competitiveness. Sources vary slightly on the conflict context, referring to it alternatively as the war in Iran or the US-Israel war with Iran.