Chancellor Friedrich Merz announced a temporary reduction in fuel taxes after a meeting of coalition leaders, aiming to relieve motorists and businesses facing sharply higher pump prices. The government will lower energy taxes on diesel and petrol by about €0.17 per liter (roughly $0.20) for two months. The measure is intended to be passed on to consumers by oil companies and should provide immediate, if short-lived, relief at the pump.
Merz connected the spike in domestic fuel costs to recent fighting in Iran that has disrupted shipping through the Strait of Hormuz and constrained tanker traffic. He warned the economic consequences of that conflict could persist and said he and Foreign Minister Johann Wadephul are working to help bring an end to the fighting.
Alongside the temporary tax cut, the coalition agreed to allow employers to pay a one-off, tax- and social-contributions-free relief bonus of €1,000 in 2026. To make up for the expected gap in public revenue, the government plans to raise tobacco taxes as early as 2026.
The announcement followed talks involving leaders across the governing coalition, including members of the conservative CDU/CSU bloc and the center-left Social Democrats—figures such as Markus Söder (CSU) and SPD co-leaders Lars Klingbeil and Bärbel Bas took part in the discussions. Merz presented the package as short-term support that complements wider reforms his administration is preparing, stressing the need to help households and firms while preserving fiscal responsibility.
Officials stressed that the benefit to drivers depends on market actors actually passing the tax savings through to retail prices; regulators and consumer groups will monitor pump prices for compliance. The package is framed as an immediate stopgap to ease energy-cost pressure while the government develops longer-term fiscal and social measures.