Germany bets on tax relief, cheaper trains to combat energy crisis

BERLIN: Germany’s government unveiled a slew of measures Thursday to ease the burden of soaring petrol and heating bills, from a 300-euro ($330) energy subsidy to the “cheapest ever” public transport for 90 days.

The relief package for households — agreed after days of wrangling in the coalition between Chancellor Olaf Scholz’s Social Democrats, the ecologist Greens and the liberal FDP — comes as Germany tries to reduce its reliance on Russian energy following Moscow’s invasion of Ukraine.

Finance Minister Christian Lindner said citizens and companies were struggling to cope with soaring energy costs.

The package of measures showed that the government would shield the country “from the negative impacts of the war”, while taking further steps to diversify energy sources, Lindner told reporters.

The relief includes a one-off 300-euro subsidy for taxpayers to help with rising energy bills, as well as a fuel tax rebate of 30 cents per litre for petrol and 14 cents for diesel over the next three months.

To encourage commuters to ditch the car and opt for more climate-friendly alternatives, the government is offering 90 days of local public transport at nine euros per month.

“Taking the bus and train will probably never have been cheaper in Germany,” Green party co-leader Ricarda Lang told at a press conference.

Other measures include additional subsidies and child benefits for lower income households, on top of similar aid announced previously.

Lindner said it was unclear how much the relief package would cost as it partly depended on the take-up of the public transport scheme.

But he said it would be roughly the same as the first round of energy relief measures which mainly targeted low-income families and amounted to about 13 billion euros. Lindner plans to unveil an additional 2022 budget shortly to take into account the new borrowing needed to cushion the economic blow from the war in Ukraine.

Germany has backed sweeping Western sanctions against Russia over its aggression against Ukraine.

But Germany has also faced criticism at home and abroad for resisting a call to boycott Russian oil and gas, a move Berlin fears could plunge Europe’s top economy into chaos.

German Chancellor Olaf Scholz warned on Wednesday that abruptly stopping Russian imports would risk “hundreds of thousands of jobs”.

Before the war in Ukraine, Germany imported 55 percent of its natural gas from Russia, half its coal and around 35 percent of its oil.

As part of its carbon reduction goals, Germany aims to phase out coal use by 2030.

But the coalition government said on Thursday it was considering keeping its coal-fired power plants open for longer to ensure energy security and reduce gas usage.