Chancellor Friedrich Merz announced a temporary cut in fuel taxes to ease surging pump prices following a meeting of coalition party leaders. The government will reduce energy taxes on diesel and petrol by about €0.17 per liter (roughly $0.20) for two months. Merz said the measure should be passed on to consumers by oil companies and will “very quickly improve the situation for motorists and businesses in the country.”
The move follows a sharp rise in fuel prices after fighting in Iran disrupted shipping through the Strait of Hormuz, constricting oil tanker passage. Merz linked the domestic price pressures directly to that conflict, warning that its economic effects are likely to be long-lasting and saying he and Foreign Minister Johann Wadephul were working to help bring an end to the war.
In addition to the temporary tax cut, the coalition plans to allow employers to pay a one-off, tax- and contribution-free relief bonus of €1,000 in 2026. To offset the resulting shortfall in public revenue, the government expects to raise tobacco taxes as early as 2026.
The announcement came after talks involving leaders of the conservative CDU/CSU bloc and the center-left Social Democrats, including Markus Söder (CSU) and SPD co-leaders Lars Klingbeil and Bärbel Bas. Merz framed the package as short-term relief that complements broader reform efforts his government is preparing, and emphasized the need for measures that support households and businesses while maintaining fiscal responsibility.
Officials emphasized that the effectiveness of the relief depends on market actors passing savings to drivers; regulators and consumer groups will be watching pump prices for compliance. The package is intended to provide immediate respite from high energy costs while the government continues to develop longer-term fiscal and social policies.