German government relents on subsidies after farmers protest

Henry

The German government has abandoned some of its plans to cut agricultural subsidies in the face of huge protests by farmers.

Contrary to the initial plan, a rebate on vehicle tax for agricultural machinery will be maintained, Chancellor Olaf Scholz’s spokesperson, Steffen Hebestreit, said in a statement.

Tax rebates on fuel for the same vehicles will also not be completely suspended, but gradually reduced.

This step was decided in light of new information about the state of the German government’s finances and to “avoid sometimes considerable bureaucratic red tape for the affected companies”.

The announcement about the suspension of the subsidies was made at the end of December after a shocking court decision hopelessly overturned the government’s spending plans.

Farmers protest in Berlin over federal government plans to cut subsidies

Farmers from all over Germany hold a protest in Berlin against the federal government’s plans to make cuts. The German government wants to cut subsidies for agricultural diesel in order to achieve savings in the federal budget.

Posted by NoComment on Monday, December 18, 2023

The move almost immediately resulted in enormous protests by farmers; thousands of them – some behind the wheel of colossal agricultural machinery – descended on Berlin. The protesters blocked one of the main routes in the heart of the capital and used tractors to dump manure on the streets.

According to the police, around 6,000 farmers protested, while the German Farmers’ Association (DPV) estimated the figure at between 8,000 and 10,000.

The cuts would cost farmers around €1.1 billion (about R225 billion), Joachim Rukwied, head of the association, said earlier. “This is a declaration of war and we will fight the battle.”

In addition to the manure they spread, the farmers also loudly booed the Minister of Agriculture, Cem Ozdemir, and rang cowbells for him.

Rukwied has now emphasized anew that the partial reinstatement of the tax rebate is “insufficient”.

“Our position remains the same: Both proposed cuts must be abandoned.”

Germany’s highest court ruled in November that the government violated a constitutional provision on debt when it transferred €60 billion (about R1.2 thousand billion) earmarked for pandemic support to a climate fund. The ruling plunged the governing coalition into chaos and summarily halted spending plans.

After an emergency budget for 2023 was accepted, social democrat Scholz and his junior coalition partners, the Greens and the pro-business FDP, put together a new financial plan for 2024.

The government hopes to pass the amended budget through the lower house of the German parliament in January, says Hebestreit. Until this can be done, a provisional budget applies.