German farmers win continued diesel subsidy

Cabinet decision confirms environment ministry's failure to include agriculture in ecotax programme

The German cabinet yesterday decided to maintain a subsidy on diesel used in agriculture and forestry, exempting these uses from general rises in diesel fuel duty under the country's ecotax programme. The support had been due to be abolished, and the decision marks a victory for farmers and a defeat for the environment ministry.

Under the new law, agricultural, or "red," diesel will be taxed at euros 0.29 (DM0.57) per litre next year compared with euros 0.40 for road diesel, representing a subsidy of euros 0.12 per litre. The effective subsidy will increase to euros 0.15 in 2002 and euros 0.18 in 2003 as road fuel taxes increase by euros 0.03 per year under the ecotax law. Nevertheless, the cabinet cut the tax differential for this year to euros 0.15 in place of euros 0.21 per litre.

An agriculture ministry spokesperson told ENDS Daily that German farmers were paying much more for diesel than those in most other European countries. The ministry still wanted to move German agricultural diesel taxes down to match levels enjoyed by other countries' farmers, she said. German farmers' union DBV welcomed the cabinet's decision but said that the level of tax was still almost three times the 1998 level of euros 0.11 per litre.

Follow Up:
German agriculture ministry, tel: +49 30 20060; DBV, and press release.

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