•A fuel pump nozzle
Chancellor Friedrich Merz said today Germany will slash fuel taxes as households struggle with the energy shock from the Middle East war, while warning the conflict will have long-lasting economic consequences.
The announcement came after oil prices surged again following the collapse of US-Iran peace talks and US President Donald Trump’s decision to impose a blockade on the Strait of Hormuz, reports AFP.
Merz said the war “is the root cause of the problems we face in our own country”, and stressed Berlin was doing all it could to try to bring the conflict to an end.
Following talks between his CDU party and its coalition partners, Merz said his government had decided to cut the tax on petrol and diesel by around 17 euro cents ($0.19) for two months.
“This will very quickly improve the situation for drivers and businesses in the country, and above all for those who, mainly for professional reasons, spend a great deal of time on the road,” he told a news conference in Berlin.
Fuel prices in Germany, like elsewhere, have jumped sharply since the outbreak of the US-Israeli war against Iran at the end of February.
Employers will also be able to pay their staff tax-free bonuses of up to 1,000 euros ($1,170) to mitigate the impacts of inflation, which has already started rising in Germany, the government announced.
Merz warned, however: “At the same time, we cannot offset every single outcome on the market with government funds… The state cannot absorb all uncertainties, not all risks, not all disruptions in global politics.”
The government plans to bring forward an increase in tobacco taxes to finance the reduction in fuel duties, Finance Minister Lars Klingbeil said.
Germany, Europe’s biggest economy, has been hard hit by the surge in energy costs at a time when many of its power-hungry manufacturers were already facing headwinds from US tariffs and fierce Chinese competition.
Merz warned the war’s effects were likely to be long-lasting. “The German economy will face a significant burden over an extended period,” he said.
Leading economic institutes this month slashed their growth forecast for Germany to just 0.6 per cent for 2026, down from a pre-war prediction of 1.3 per cent.
Philippine President Ferdinand Marcos also said Monday excise taxes on LPG and kerosene would be trimmed to ease the fuel price shock wrought by the US-Israeli war on Iran.
“We were hoping for a good outcome from the peace talks (between) the US and Iran, but it appears they were unable to strike a deal, which is why we will continue to help our people,” he told a news conference.
“We have reduced the tax on petroleum products directly used by our people in their everyday lives.”
Following the legislature’s earlier passage of a law authorising him to adjust fuel excise taxes, Marcos said the cost of liquefied petroleum gas, the country’s fuel of choice for cooking, would be trimmed by 3.36 pesos (5.6 US cents) per kilogram from tomorrow.
He said the price of kerosene, the cooking fuel used by poorer families, would drop by 5.60 pesos per litre.
Marcos said he would convene a meeting of a government crisis committee tomorrow to discuss possible excise tax adjustments on gasoline and diesel, the main fuels for public transport.
The Philippines sources its crude oil from the Middle East and imports refined petroleum products mainly from Asian refineries that are also dependent on crude oil shipped through the Strait of Hormuz, which Iran has effectively closed.
Local diesel pump prices have more than doubled to about 145 pesos ($2.41) a litre since the start of the war.
The government revealed last week war-driven inflation figures that showed food prices had increased nearly twice as fast in March as the month before.
