German fuel tax cut not fully reaching diesel drivers, Ifo says

By Cian Muenster and Kira Britten

Oct 22 (Reuters) - German diesel drivers are receiving only part of a temporary fuel-tax cut introduced by Chancellor Friedrich Merz's government this month, according to an analysis by the Ifo Institute on Thursday.

Germany introduced the temporary fuel-tax cut earlier this month to shield consumers from higher energy costs linked to tensions in the Middle East.

Ifo said only about 14 euro cents of the 17-cent-per-litre tax cut had been passed on to diesel drivers over the past seven days. The institute found motorists received the full reduction for Super E5 petrol and about 16 cents for Super E10.

Florian Neumeier, deputy head of Ifo's public finance centre, said the findings echoed Germany's previous fuel-tax rebate, when diesel prices also failed to reflect the full reduction promised by the government.

A spokesperson for Germany's economy ministry told Reuters that available evidence from scientific institutions suggested the rebate had so far been largely passed on to consumers.

A finance ministry spokesperson said the government continued to expect the tax relief to be passed on in full to consumers. Both ministries declined to comment on the Ifo study.

Consumer group Federation of German Consumer Organisations (VZBV) said the findings confirmed what many motorists were experiencing at filling stations.

"The fuel rebate is once again becoming a corporate rebate," VZBV head Ramona Pop said, calling for targeted support for heavily burdened households and a previously promised cut in electricity taxes.

Another German economic institute, DIW Berlin, said last week that only around two-thirds of the fuel-tax cut was reaching consumers and cited signs of weak competition at the refinery and wholesale level.

Germany estimates the temporary fuel-tax cut, which runs through Dec. 31, will cost public finances about €2.5 billion.

($1 = 0.8937 euros)

(Reporting by Cian Muenster and Kira Britten; Editing by Matt Scuffham and Devika Syamnath)