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BERLIN (AP) – The German government said Thursday it would water down a cost-cutting plan that has infuriated farmers, abandoning a proposed repeal of a car tax exemption for farm vehicles and phasing in cuts to agricultural diesel tax breaks. did. .
The cuts were part of a package agreed last month by leaders of Prime Minister Olaf Scholz’s three-party coalition to plug a 17 billion euro ($18.6 billion) hole in the 2024 budget.
Farmers staged a tractor protest in Berlin this month and threatened further demonstrations, and even Agriculture Minister Cem Ozdemir voiced opposition to implementing sweeping cuts. He said farmers have no alternative to diesel.
Germany’s highest court has decided to repurpose 60 billion euros (about $66 billion), originally intended to alleviate the impact of the coronavirus pandemic, to fight climate change and modernize the country. Following its cancellation, the budget needed to be reviewed. This operation violated Germany’s strict self-imposed limits on debt growth.
According to a government statement on Thursday, Scholz, Deputy Prime Minister Robert Habeck and Finance Minister Christian Lindner will maintain the motor vehicle tax exemption for agricultural vehicles to save “sometimes significant bureaucratic efforts” for those involved. He said he agreed.
He added that the diesel tax cut would no longer end all at once, giving farmers “more time to adapt”. This year there will be a 40% reduction and a further 30% reduction over the next two years.
Other aspects of the budget deal included an abrupt end to subsidies for new electric vehicle purchases that were originally scheduled to last until the end of this year. Habeck’s Ministry of Economy announced that he will close new applications within two days from the notification.
The government also raised Germany’s levy on carbon dioxide emissions from fuels earlier this year than previously planned, which is expected to affect prices for gasoline, diesel, natural gas and heating oil. .
The price of CO2 will now be 45 euros (about $49) per tonne of emissions, up from 30 euros previously. The government had planned a small increase to 40 euros before the budget verdict.
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