The next fuel discount scheme begins today – as if we’d learnt nothing from the last one. Even back then, not the entire tax cut was passed on at the pump. Nevertheless, the federal and state governments are once again spending around 2.5 billion euros of taxpayers’ money without ensuring that the funds are targeted at those who need them most. Those who fill up frequently and drive a large car stand to gain the most.
The only thing worse would be the planned fuel price cap due to come into force in January. It tackles the problem in the wrong place: the margin currently lies with the refineries, not at the petrol pump. Particularly in the fuel market, where a few large suppliers control refineries and wholesale trade, a price cap quickly becomes a high target price. Even petrol stations that have so far been cheaper could follow suit. However, if the government sets the fuel price cap too low, suppliers will prefer to sell their diesel to neighbouring countries. That could disrupt our supply.
Instead of experimenting at the petrol pump, the federal government should prepare direct payments to low-income households and small businesses. Particularly in times of tight budgets, that would be the far more effective solution.
- Tomaso Duso, Chair of the Monopolies Commission
