BERLIN, April 13 (Xinhua) -- Germany on Monday unveiled a temporary cut in fuel taxes to ease pressure from surging energy prices driven by Middle East tensions, but economists warned the relief will be modest and risk adding to fiscal pressures.
Under the plan, energy taxes on petrol and diesel will be reduced by around 17 euro cents (20 U.S. cents) per liter for two months, according to a government statement, though the start date has yet to be specified. The government estimated the measure will result in around 1.6 billion euros (1.9 billion dollars) in lost revenue.
Speaking at a press conference on Monday, Chancellor Friedrich Merz said German economy and private households will bear a significant burden from the ongoing conflict in the Middle East for a prolonged period, even after the fighting ends. He noted the tax cut is designed to deliver quick relief to motorists and businesses facing high fuel costs.
While the move was welcomed by some, it drew skepticism from leading economists.
Marcel Fratzscher, president of the German Institute for Economic Research (DIW), said the relief will likely be limited and could even backfire, warning that a significant share of the tax cut may not be passed on to consumers but instead benefit oil companies.
Stefan Kooths, expert at the Kiel Institute for the World Economy, called it an "illusion" to expect government action to shield households from rising energy costs, saying higher oil prices will erode purchasing power and leave the overall economy worse off.
"The country can only redistribute the burden," he was quoted by the German media as saying, cautioning that the tax cut will widen public budget deficits that will eventually need to be offset elsewhere.
Joachim Ragnitz of the Munich-based ifo Institute echoed those concerns, arguing the measure will merely shift the costs of the energy crisis without addressing underlying supply constraints.
German fuel prices have surged in recent weeks. Prices eased briefly after a temporary ceasefire was announced on April 7 but rebounded again amid renewed supply concerns.
Germany's largest automobile club ADAC said diesel prices jumped sharply on Monday after U.S. President Donald Trump announced on Sunday plans to block the Strait of Hormuz, a strategic waterway through which about 20 percent of the world's oil shipments pass.
