The diesel tax gap (GBG)

This background paper by Green Budget Germany examines the impacts of the German tax rebate for diesel which was introduced in 1986 to promote commercial road freight transport. At that time, passenger cars with diesel engines were a rare exception, whereas today several million car and truck owners benefit from the lower tax rate. According to the paper, the tax advantage is environmentally harmful, distorts the market and burdens public finances, and should be phased out with revenues used to promote low-carbon mobility. The paper also provides an overview of other relevant policy measures in Germany, such as registration taxes, company car taxation and intelligent road pricing schemes. The paper is available to download on the GBG website.