German lawmakers have given their approval to cuts in fuel subsidies for farmers, sparking protests, and a revised 2024 budget necessitated by a court ruling that disrupted the government’s financial plans.
The lower house of parliament voted in favor of the revamped 476.8 billion ($516 billion) budget for Europe’s largest economy. This budget includes measures to address the financial gap caused by subsidy cuts, a consequence of the court ruling.
Typically, the budget is approved in December. However, the government had to rework its plans after Germany’s highest court invalidated its decision to reallocate 60 billion euros ($65 billion) intended to mitigate the effects of the COVID-19 pandemic. The funds were initially designated for climate change initiatives and modernizing the country, but the court ruled against breaching Germany’s self-imposed debt limits.
The court’s decision left a 17 billion-euro hole in the 2024 budget. Following negotiations, Chancellor Olaf Scholz’s three-party coalition proposed a package involving subsidy cuts, reduced spending, and continued support for Ukraine, despite facing public opposition.
The coalition initially suggested abolishing a car tax exemption for farming vehicles and reducing tax breaks on diesel used in agriculture. However, amid resistance, the exemption was retained, and the tax breaks were staggered over three years. The government proceeded with the plan, despite subsequent protests from farmers.
The legislation also outlines an increase in the tax on plane tickets. Last month, Germany elevated the levy on carbon dioxide emissions from fuel beyond initial plans, and subsidies for new electric cars, originally set to continue for several more months, were abruptly terminated.
The upper house of parliament, representing Germany’s 16 state governments, is yet to review the cost-cutting measures. Its next meeting is scheduled for March 22, where objections to the plan could potentially be raised, leading to a committee resolution for disputes between the two houses.
