German government hasn’t canceled 'net zero' agricultural diesel taxes

Context 

In recent weeks, farmers in Germany have protested against the German government’s plans to abolish tax relief on agricultural diesel and tax exemptions on agricultural vehicles. The protests led the government to change some of its planned cuts on January 4, 2024. 

The changes were met with exultation on social media. “The German Farmers HAVE WON. After bringing Berlin and other cities to a standstill, the government has backed down on Net Zero taxes on agricultural diesel,” said posts on Instagram and Facebook that include footage from a recent protest.  

However, while the German government did scrap its plans to abolish tax exemptions on agricultural vehicles, it did not drop its plans to abolish tax relief on agricultural diesel. Instead it decided that the tax relief would be reduced over three years instead of all at once. Plans to raise CO2 prices have not changed. 

In fact

Back in November 2023, Germany’s constitutional court ruled that the government’s plans to repurpose money from an emergency COVID-19 fund violated debt limits set out by the constitution, leaving a €60 billion gap in the country’s budget with €17 billion to be covered in 2024. 

In December, the government agreed on several cuts to close the gap, among them the “abolition of climate-damaging subsidies,” which included the abolition of tax relief on agricultural diesel and tax exemption for forestry and agriculture vehicles. Among other proposed austerity measures was an increase in CO2 prices.  

The plans were met with protests from farmers across Germany through December and January. As a result, on January 4, the government agreed to scrap its plans to abolish tax exemptions for agriculture vehicles while phasing out the tax relief on agricultural diesel gradually instead of all at once. The plans to raise CO2 prices were not changed.

When asked if the Government had backed down from taxes on agricultural diesel, the Bundesministerium der Finanzen, Germany’s ministry of finance, forwarded the January 4 agreement to Logically Facts. The text of the agreement explains that the tax relief will be reduced by 40 percent this year, by 30 percent in 2025, and will end in 2026.

“As things stand, the (gradual) abolition of tax breaks on agricultural diesel remains in place,” the office of Ottmar Edenhofer, director of the Mercator Research Institute on Global Commons and Climate Change in Berlin, told Logically Facts. 

Niklas Höhne, a professor of climate policy at the New Climate Institute, told Logically Facts that the government “at least in part” has taken back the proposal to raise the tax. He noted that the tax (break) is not called a “net zero” tax in Germany. 

The office of Edenhofer added that both the current and the planned carbon price in Germany are “far from being consistent with ‘Net Zero’.” The prices would have to be much higher for that to be the case. 

The government’s proposed changes did not satisfy German farmers, who have continued their protests. "This can only be a first step. Our position remains unchanged: both proposals for cuts must be taken off the table," Joachim Rukwied, president of the Deutscher Bauernverband (German Farmers' Association) said during a January 4 protest. He has called the changes a “foul compromise.” Rukwied has warned that protests will continue if the subsidy cuts for agricultural diesel are not withdrawn.

There could however still be changes to the government’s proposal. On January 18, 2024, the Bundestag's Budget Committee will meet to discuss planned cuts in the federal budget. 

The budget is expected to be passed in parliament at the beginning of February. 

The verdict

The German government has not backed down on abolishing tax relief on agricultural diesel. The government changed plans to phase out the tax relief gradually instead of scrapping it all at once. A plan to raise CO2 prices remains unchanged. Therefore, we have marked this claim as misleading.