These two measures could make Lindner's life easier

Finance Minister Lindner needs money and needs it fast. There is potential in the subsidies. At around 100 billion euros, they have reached a record level. Two thirds of these are considered harmful to the climate. Two measures alone could help.

Where should the money come from? That's not the one million euro question - it's the 17 billion euro question. This is exactly the amount the federal government needs to find for the 2024 budget. He expects a shortfall of 17 billion euros for the coming year, said Finance Minister Christian Lindner on ZDF television on Wednesday evening, quantifying the actual extent of the budget shortfall for the first time. This is because the 60 billion that the Federal Constitutional Court cut from the climate and transformation fund had been planned until 2027. They therefore do not have to be replaced all at once, but only in stages.

17 billion sounds a little more digestible than 60 billion. But it's still a lot of money. One source for the replacement could be the subsidies that the state grants every year. According to the Kiel Institute for the World Economy, these are at record levels. 208 billion euros are earmarked for direct state aid and tax breaks in the current year, it says. However, this also includes the billions from the now closed Economic and Transformation Fund. This was mainly used to finance the gas and electricity price brakes. However, these will expire at the end of the year.

This still leaves 98 billion in subsidies at federal level alone. In addition, according to the Federal Environment Agency, a large part of this is harmful to the climate. A report by the agency, albeit based on figures from 2018, states that the climate-damaging subsidies amount to 65 billion euros. So could this kill two birds with one stone? Saving money and doing good for the climate?

The simple answer is yes in principle, although the Federal Environment Agency's list is merciless. Social housing is also listed there because concrete consumption is bad for the environment. Not even the Greens are calling for all these subsidies to be abolished.

18 cents less tax on a liter of diesel

But there are certainly points on the list that could be tackled. One of the classics is the so-called diesel privilege. This makes every liter of diesel 18 cents cheaper than if it were taxed in the same way as petrol. If the privilege were abolished, this could mean an average additional cost of 227 euros for individual diesel drivers, based on the average annual mileage of just under 18,000 kilometers determined by the Federal Motor Transport Authority and a consumption of 7 liters per 100 kilometers.

In 2017, the Greens in the Bundestag asked the then federal government how much money this would save the state. The answer for 2015 would have been just under 3.7 billion euros. However, the letter from the federal government also states that the lower tax on diesel is intended to compensate for the higher vehicle tax on diesel cars. Whether this means that the diesel tax would have to be reduced if it were to rise remains unclear.

The Federal Environment Agency, on the other hand, assumes possible additional revenue of 8.2 billion euros for 2018. Like the German government, this is based on the amount of diesel fuel used in Germany, but assumes double the amount. Instead of around 20 billion liters, as the federal government did a year earlier in its response to the Greens, it calculates a good 44 billion liters. The source for this is a survey by the Federal Statistical Office, which determined the amount of diesel sold. However, it does not differentiate between cars and trucks. Apparently, unlike the German government, the Federal Environment Agency includes HGVs.

One could now snidely ask whether higher diesel prices would really help the climate. As many people are dependent on their cars, they would continue to use them anyway. However, data from the Federal Motor Transport Authority shows that the mileage of diesel drivers has fallen steadily in recent years. One reason for this is likely to have been the sharp rise in fuel prices. It is therefore to be expected that mileage will continue to fall if prices continue to rise. And this would have an effect on the climate.

The diesel privilege seemed sensible to many because it helped and continues to help the car industry and thus the backbone of the German economy. So it is hardly surprising that the FDP is against abolishing it. It sees itself not only as an advocate for corporations, but also for small businesses. FDP leader Lindner likes to point to the master craftsman and the fact that the most frequently used company car is the VW Passat. It cannot be denied that abolishing the diesel privilege would also affect small businesses. However, it is also true that the heyday of the diesel is over. Its market share has also been falling in Germany for years. The future is electric, the course has been set.

Another classic in the subsidy debate is kerosene. Aircraft fuel is not taxed at all, a blatantly unequal treatment compared to rail and road transport. According to the Federal Environment Agency, the state loses almost 8.4 billion euros every year as a result. However, this figure should also be treated with caution. This is because the office based its calculations on the kerosene refueled in Germany. However, if Germany were to tax kerosene on its own, airlines would be able to refuel as much as possible abroad. This would allow them to simply avoid the tax.

Subsidy reduction or tax increase?

At the very least, an EU-wide tax would be necessary, although the same problem would arise to a lesser extent. It would be even better to get as many other countries on board as possible. But that would mean years of negotiations. A kerosene tax is therefore not particularly promising for plugging short-term budget holes. There is still the option of taxing kerosene for domestic flights - but according to the German government's subsidy report, this would "only" generate 584 million euros. It would be legally possible, as the Verkehrsclub Deutschland (VCD) emphasizes. It also points out that Norway and the Netherlands already tax kerosene.

The end of the diesel privilege for cars and a new kerosene tax could therefore generate a good four billion euros. That would be a step forward in the search for 17 billion euros - and perhaps so tempting for the Finance Minister that he would not interpret such a reduction in subsidies as a tax increase - which he has ruled out. Especially as there is no question that both subsidies contradict the goal of climate protection. This government is not the first to become entangled in contradictions: it promotes diesel and electric cars. It is promoting rail and air traffic. This is not consistent. And it is an example of the fact that the coalition government must decide what it actually wants and where it wants to set its priorities.

Given the budget shortfall of 17 billion euros for the 2024 budget, Finance Minister Lindner is considering reducing harmful climate subsidies, which amount to around 65 billion euros according to the Federal Environment Agency.
Christian Lindner, as part of the Traffic light coalition, could use the savings from reducing harmful climate subsidies to help meet the budget shortfall, potentially making a significant contribution towards climate protection as well.

Source: www.ntv.de