FINANCE / ADMINISTRATION

Energy Tax Act

In 2006, the German Bundestag (federal parliament) approved a tax break for natural gas and liquid gas until 2018 - something that the VDIK had been requesting for quite some time. This will help these two alternative drive systems to further penetrate the market. Moreover, the Bundestag also decided to gradually eliminate the tax breaks for biodiesel and to gradually introduce a tax on vegetable oil.

Biofuels put on the market based on the Biofuel Quota Act (Biokraftstoffquotengesetz) or having to be admixed to gasoline and diesel fuel under said Act as of 01 January 2007 are excluded from this tax break. The admix percentages are taxed the same as other fuels.

Second generation biofuels qualify for a tax break until the end of 2015. For these biofuels, which are deemed particularly worthy of tax incentives, a tax break in the amount of the energy tax attributable to the biofuel amount will be granted, even if that amount serves to fulfill the quota stipulated under the Biofuel Quota Act. In the opinion of the VDIK, these tax breaks should not be regarded as subsidies but rather as an investment by the State into the future.

The VDIK opposes the discussions on energy taxation currently ongoing at the European level.

European harmonization of diesel taxes: Revision of the European Energy Tax Directive

In April 2011, the EU Commission presented a draft for a revised version of the European Energy Tax Directive. According to that draft, the minimum tax rate on diesel fuel will be increased from currently EUR 330 to EUR 412 per 1000 liters by 2020. The minimum tax rate for Otto fuel would remain unchanged at EUR 359 per 1000 liters. As in Germany, the tax rates are already much higher than that - currently EUR 470 for diesel and EUR 659 for Otto fuel - this revision will be of no further relevance for Germany.

Moreover, in order for the taxation system to be transposed correctly in the individual member states in accordance with the Directive, the plan is for the revised Directive to provide for mandatory equal taxation of vehicle fuel and heating fuel in accordance with their energy content and CO2 emissions. Given the higher energy content of diesel fuel compared to Otto fuel, the amount of tax per liter would have to increase from currently 47 cents to 75 cents if the tax on gasoline remains at around 66 cent per liter. This represents a 28 percent increase. According to the draft directive, the EU member states will have until 01 January 2023 to implement its provisions. Chancellor Angela Merkel and Transport Minister Peter Ramsauer stated that they plan to oppose the plans being hatched in Brussels.

The draft for a revised Energy Tax Directive could lead to a drop in the demand for diesel vehicles. There would then be higher fuel prices in addition to the already higher acquisition costs for those vehicles and the higher motor vehicle tax. This could endanger the EU's climate goals as the energy efficiency of diesel vehicles is said to be at least 25 higher than that of gasoline-powered vehicles, while at the same time also emitting less CO2. The auto industry has invested large sums into the development of efficient diesel engines over the past years.

Vehicles powered with natural gas or liquid gas would also be subject to a hefty tax burden. The gradual increase to the general energy consumption tax rate and the elimination of tax exemptions lead to additional taxation that goes against the EU's declared wish of promoting clean and energy efficient vehicles.

The VDIK vehemently argues against these plans and the inevitable increase in the cost of mobility resulting therefrom.