Published by Global Banking & Finance Review®
Posted on April 10, 2026
3 min readLast updated: April 10, 2026
Add as preferred source on GoogleGerman Economy Minister Katherina Reiche has rejected SPD’s proposed windfall tax on energy firms as costly and unconstitutional, instead advocating targeted commuter tax relief, exposing mounting tensions within Chancellor Merz’s coalition over how to ease fuel price pressures.
By Andreas Rinke and Ludwig Burger
BERLIN, April 10 (Reuters) - Germany's economy minister on Friday proposed higher tax breaks to commuters but dismissed proposals by the government's junior coalition partner for an energy windfall tax, stoking a dispute over how to tackle soaring fuel prices.
The Iran war has forced countries including Germany to tackle the biggest-ever disruption to global energy supplies, with Europe's largest economy already struggling with weak growth and global tariff ructions.
"The measures must be targeted. They must be directed at those areas where the burden is greatest. These include commuters or the logistics sector," Economy Minister Katherina Reiche told reporters.
Highlighting strains in the coalition between Chancellor Friedrich Merz's conservatives and Finance Minister Lars Klingbeil's Social Democrats, Reiche branded Klingbeil's proposals "expensive and ineffective".
MERZ TELLS REICHE TO EXERCISE RESTRAINT, SOURCE SAYS
A person close to Merz told Reuters that Reiche's remarks undermined a push by the chancellor to resolve coalition disputes discreetly.
"The Chancellor is disconcerted by the public argument and has urged Minister Reiche to exercise restraint," the source said.
Reiche made her remarks while Klingbeil was consulting with heads of unions and industries behind closed doors.
A government spokesperson declined to comment.
Per kilometre of travel from home to primary workplace and back, Germany lets commuters deduct 0.38 euros ($0.45) from taxable income.
Klingbeil, who is also Merz's Vice Chancellor, had proposed an energy windfall tax on excessive profits in the energy sector, looking to regain the policy initiative following painful losses for his party at two regional state elections this year.
"I categorically reject the windfall tax," Reiche said, adding it likely violated Germany's constitution.
The Social Democrats quickly hit back, with their Deputy Parliamentary Group Leader Esra Limbacher saying Reiche was not fit for her post.
"It is regrettable that an economics minister sees herself as a representative of the oil companies instead of working with her coalition partner to provide relief for the many small businesses," Limbacher told the Rheinische Post newspaper.
Reiche, who is also in charge of energy, called for lower diesel taxes for trucks and more direct payments to help people who travel long distances to work as temporary relief measures.
She added that coalition leaders would negotiate over the weekend.
Germany has already introduced some measures, including limiting petrol stations to just one price rise a day.
($1 = 0.8536 euros)
(Writing by Ludwig Burger and Kirsti Knolle; editing by Matthias Williams and Christina Fincher)
Germany's economy minister proposed higher tax breaks for commuters and lower diesel taxes for trucks, while rejecting an energy windfall tax.
The dispute centers around whether to introduce an energy windfall tax or focus on targeted relief like commuter tax breaks, revealing strains between coalition partners.
An energy windfall tax targets excessive profits in the energy sector. It was proposed by Finance Minister Lars Klingbeil but rejected by Economy Minister Katherina Reiche.
German commuters can deduct 0.38 euros per kilometer for travel between home and work from their taxable income.
Suggested measures include direct payments for long-distance commuters, lower diesel taxes for trucks, and limiting petrol station price increases.
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