Criticism of the measure

Fuel Price Cap “Sloppy” and “Wrong”

Does the fuel price cap provide real relief?(Bild: APA/HARALD SCHNEIDER)

No burden on the budget and less of a burden on commuters: The federal government is temporarily lowering the fuel tax and introducing a margin cap for refineries. The measures have drawn (self-)praise—but also massive criticism.

“O’zapft is” is the motto at gas stations now more than ever. Rising fuel prices have even led to panic buying in some states—while others are driving to the pump with half-full tanks. These are concerns the government aims to—and will—address with these measures. Starting April 1, a margin cap will be introduced for refineries and gas stations, and the mineral oil tax will be temporarily reduced. The relief will amount to an average of ten cents per liter. This is intended to return the additional revenue generated by the value-added tax to drivers.

Iran crisis must not become a business model
The relief is to be directly proportional and budget-neutral, according to the government. The goal is to prevent “a crisis from becoming a business model,” said SPÖ Vice-Chancellor Andreas Babler. Lower Austria’s powerful Vice-Governor Stephan Pernkopf, who was the first to call for similar measures, sees the government’s actions as a validation of his stance. “The implementation of my demand to lower fuel taxes is a first step in the right direction toward relief,” he says.

In the government’s inner circles, officials are satisfied with the outcome. They say they were able to prevent the discussed “price cap fantasies.” The result is a “sensible crisis measure to prevent inflation shocks.” The Greens want even more. “Anyone who wants to lower prices must tackle the excess profits and margins of the oil giants. The government has failed to provide some details here. I expect them to put those on the table quickly,” said party leader Leonore Gewessler.

“Sloppy populism, short-term window dressing”
Criticism is also coming from industry: IV President Georg Knill sees “wrong solutions born of reflex” as well as ideology-driven interventions. Oil prices hovered around $100 or higher for a long time, and there were no immediate interventions back then. “Prices also serve an important signaling function,” said Knill. “It’s incomprehensible why they’re immediately switching to ‘alarm mode’ and acting as if the world is ending.” Many experts had previously criticized the government’s “knee-jerk reactions” as well.

The Austrian Federal Economic Chamber (WKÖ) views the interventions in margins as an “absolute breach of taboo,” according to WKÖ Secretary General Jochen Danninger, who, however, criticizes the reduction in the mineral oil tax. For the liberal think tank Agenda Austria, on the other hand, the fuel tax cut is merely “short-term window dressing,” and the cap is “sloppy populism.” Tax cuts are always welcome, they say, but only when backed by a clear strategy.

Most of the additional costs remain
Representatives of the transport industry are pleased with the tax cut. But they say it can only be a first step. “We stand by our demand that the CO₂ price must be suspended—for a limited time—as this is the only way to prevent a costly avalanche,” says Markus Fischer, chairman of the Association of Freight Carriers. He calculates based on a truck traveling about 100,000 kilometers per year. The currently higher diesel price results in additional costs of 11,400 euros per truck. The current measure saves about 2,500 euros per truck, but 8,900 euros remain the responsibility of the transporters.