Traffic lights partially back down on cuts for farmers

Agricultural subsidies - Traffic lights partially back down on cuts for farmers

The German government responds to massive protests by farmers against planned subsidy cuts. The coalition wants to abandon the abolition of the motor vehicle tax exemption for agriculture. The abolition of tax concessions for agricultural diesel is to be spread out and implemented in several stages, according to the federal government spokesperson in Berlin. However, the German Farmers' Association considers the measures to be insufficient - and is sticking to a week of action planned from Monday.

Traffic light changes course

Federal Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Federal Finance Minister Christian Lindner (FDP) agreed on changes to the original plans. The abolition of the preferential tax treatment for forestry and agriculture will be waived in order to avoid the "sometimes considerable bureaucratic burden" for the companies concerned.

The preferential tax treatment for agricultural diesel is to be reduced in several stages. This should give the affected companies more time to adjust. According to the federal government, the rate of relief will be reduced by 40 percent in 2024, followed by a further reduction of 30 percent in 2025 and 2026. There will no longer be a subsidy for quantities consumed in 2026. The reimbursement of the quantities consumed in 2023 in 2024 will remain unchanged.

Habeck said: "We have spoken intensively with each other again in the last few days because we see the burden on farmers." He added that a solution had been found that would help farmers. Agriculture Minister Cem Özdemir (Greens) emphasized that a disproportionate burden on agriculture and forestry had been averted. The ministry had made its own proposals for gene financing.

FDP parliamentary group leader Christian Dürr spoke of a fair solution for farmers. FDP parliamentary group deputy Carina Konrad said: "The savings proposals under discussion would have hit farmers hard, which is why they would definitely not have been acceptable in their current form." SPD parliamentary group deputy leader Achim Post made it clear that the savings in the budget had to be balanced overall without placing too great a burden on individual groups.

Massive protests against plans

In mid-December, Scholz, Habeck and Lindner had agreed on a package of measures to plug billions of euros of holes in the federal budget following a budget ruling by the Federal Constitutional Court. This also included the abolition of the so-called agricultural diesel and the motor vehicle tax exemption for farmers. The plans had triggered massive protests from farmers and were also controversial within the traffic light coalition.

Specifically, it is about the regulation that farms can receive a partial refund of the energy tax for diesel - with a refund of 21.48 cents per liter. Another issue is that agricultural and forestry vehicles are exempt from vehicle tax. The abolition of preferential treatment in vehicle tax for forestry and agriculture should generate additional revenue of 480 million euros, while the abolition of tax concessions for agricultural diesel should generate additional revenue of up to 440 million euros.

Farmers' President Joachim Rukwied described the cutback plans as unreasonable. Commenting on the planned changes, he said: "This can only be a first step. Our position remains unchanged: Both proposals for cuts must be taken off the table." It is also about the future viability of the sector and the question of whether domestic food production is still desirable at all. "We are therefore sticking to our action week."

The German Farmers' Association has called for a week of action against the planned cuts starting on Monday. A major demonstration is planned for January 15 in Berlin.

Criticism came from Greenpeace. "The climate-related floods are currently flooding fields and pastures across Germany and the German Farmers' Association wants to continue protesting against climate protection - that is incomprehensible," said agricultural expert Martin Hofstetter. The massive use of fossil fuels in particular is and remains harmful to the climate.

Less relief in the budget

Following the Karlsruhe budget ruling, Scholz, Habeck and Lindner had to plug a financial gap of around 30 billion euros in the core budget and in the climate and transformation fund. According to the federal government, the changes now announced will lead to less relief in the federal budget in 2024. However, these could be offset. For example, revenue from an offshore wind tender is to be used more broadly. The Federal Ministry of Agriculture will make an additional savings contribution of 100 million euros.

Reference was also made to leeway resulting from updated economic and budgetary data in the federal budget. The 2004 federal budget is to be passed by the Bundestag at the end of January.