Volkswacht Bodensee - Germany drops planned subsidy cuts after farmers protest

Contrary to the initial plans, a discount on the vehicle tax for agricultural machinery would be maintained, Chancellor Olaf Scholz's spokesman Steffen Hebestreit said in a statement.

Meanwhile, tax breaks on fuel used by the same vehicles would not be scrapped completely but reduced progressively, Hebestreit said.

The move was agreed in light of new information on the state of the government's finances and "in order to avoid the sometimes considerable bureaucratic effort for the companies affected", he said.

An end to the subsidies was initially announced in December after a shock court ruling upended the government's spending plans.

The move almost immediately prompted significant protests by farmers, who descended on central Berlin in their thousands.

The protestors blocked one of the main roads in the heart of the capital with tractors and dumped manure on the street.

The partial reinstatement of the tax breaks was "insufficient", said Joachim Rukwied, the head of the German Farmers' Association (DBV).

"Our position remains unchanged: both proposed cuts must be abandoned," Rukwied said.

Germany's highest court decided in November that the government had broken a constitutional debt rule when it transferred 60 billion euros ($66 billion) earmarked for pandemic support to a climate fund.

After adopting an emergency budget for 2023, Social Democrat Scholz and his junior coalition partners, the Greens and the pro-business FDP, hashed out a new financial plan for 2024.

The government hoped to pass the revised budget through the lower house of the German parliament in January, Hebestreit said. Until it is passed, a provisional budget applies.

R.Buehler--VB