1. Germany A review of the 2014 agricultural diesel tax break By Mariah Monnens, Spencer Tuskowski, and Tyler Hubler

2. Germany’s Diesel Tax Break Agricultural and forestry sector producers will be able to claim a tax break on diesel consumption from 2014 to 2016, as introduced in an EU meeting in March of 2013 Germany will support firms in the agricultural sector in the form of tax benefits: €214,80 per 1000 liters of diesel or a total of approximately €400 million per year We will suggest reasons for not implementing this subsidy

3. Economic History End of WWII: two separate countries - East and West. 1990 after fall of Berlin Wall: economic reunification Slow economic growth until mid 2000s Switched currency to Euro in 2002 Part of a larger economy Important dates and moments

4. Modern Economy $3.4 trillion One of largest economiesLow and stable inflation Weakened currency Cheaper exports Switching to Euro from Deutsche Mark

5. Trading France, United States, United Kingdom, Italy, Netherlands Trading partners Transport equipment (including automobiles), electrical machinery, chemicals, some food products and wine Exports Similar, but include raw materials and semi-finished products for industry Imports Exceeded EU’s 6% threshold Asked to boost investment and reduce savings rates Being blamed for draining European and global growth High trade surplus since 2007

6. The German Agricultural Sector One of the smallest sectors of the German economy Most policies made by EU and not Germany Subsidy and Export Subsidy Programs Economic value of agricultural exports is €60.1 billion, growth of 7% since 2011 Germany is a net-importer of food products Germany offers far more tax breaks on use of fuel compared to other countries such as USA 84,858,000,000 pounds of diesel fuel used in 2011

7. Effect of the Subsidy

8. Analysis of the Policy Pros Consumer and producer surplus gains Germans engaged in agricultural or forestry production receive further support in a competitive market Benefits to the domestic diesel industry Cons Cost (€1,2 billion over 3 years) Lack of assurance of the policy’s effects If prices fall below world or regional prices for agricultural or forestry products, producers who reside in countries that are strong trading partners with Germany will suffer

9. Conclusion We stand by our proposal to end the subsidy over concerns with its ability to increase agricultural production in Germany