BERLIN (DPA, CONVERSEER) – The head of the German Trade Union Confederation (DGB) has called for the reduced rate of value added tax (VAT) on certain goods to be abolished entirely.
“Reducing the reduced VAT rate from 7% to 0% would be a strong signal, especially for low earners,” Yasmin Fahimi told Saturday’s edition of the Berlin newspaper Tagesspiegel.
A VAT cut for items such as food and energy could help people on lower incomes far more than a cut in income tax, Fahimi said.
Asked how such a move could be financed, Fahimi said: “Germany could introduce a much higher VAT on luxury goods, such as extremely expensive watches, yachts, jewellery or luxury cars.” That would only burden those who could easily shoulder it, she said.
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“Overall, the mega-rich and billionaires must be made to contribute much more, instead of burdening employees and consumers,” the DGB chief said.
At present, a VAT rate of 19% applies to most goods, while a reduced rate of 7% applies to selected food items. According to reports, the government has had the impact of a VAT increase calculated as part of the reform debate.
Conservative Chancellor Friedrich Merz has not ruled out changes to taxation in connection with planned relief for employees and companies. Merz’s centre-left coalition partners are looking for ways to finance the desired relief on income tax and social security contributions.
