Roland Dürre
Thursday June 25th, 2009

Higher Value Added Tax as Logical Conclusion!

Once in a while, you really have to be grateful to Bildzeitung. It is the first newspaper to write about something that has been clear for some weeks now: the coming raise of the value added tax. It reads as follows:

As BILD heard from party members, the raise of the low tax from seven to nineteen per cent is being discussed. Currently, the low tax is applicable for victuals and flowers. According to the calculations of the parliamentary party, the raise could mean an extra 14 billion Euros for the federal budget.

The Spiegel gives a similar prognosis, whereas the Welt already talks about 25 per cent. It looks like this might be the future EU standard.

Raising the added value tax is, indeed, our last reserve. Our low added value tax on victuals, for example, is indeed very competitive by EU standards. And from the businessman’s point of view, there is no alternative to raising the added value tax.

The only thing that gives me pause is by how little the federal budget will benefit. “Only” 14 billion Euros, is what the raise mentioned in Bild would render. Considering that we have an additional 310 billion in additional debt, that is a bare drop in the ocean, to cite the famous “peanuts”. Would it at least cover the interest? So I assume that is what we will get: a low tax rate of 19 per cent, and a normal tax rate of 25 per cent. You want to bet?

But this means definitely you can kiss the reasonable federal quota of 50 per cent good bye.

But the reaction of Georg Fahrenschon, Bavarian Minister for Finances, this morning shortly before 8 a.m. on radio Bayern 2 was typical: he says that if you start talking about higher added value tax at this time, you are jeopartizing the economical uplift, and you lack all economic expertise. …

🙂 Now I hope that I am not jeopardizing the economical uplift with this article.

C’est la vie!

RMD
(translated by EG)
P.S.
I often think that the positive consumers’ attitude in Germany is due to black market and shadow market businesses. They boom like never before. Well, it saves value added tax. ;-).

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