According to a study conducted by the union-affiliated Böckler Foundation, raising the value-added tax (VAT) would impact low-income earners proportionally more severely than it would affect high-income earners. This finding remains true even when considering a scenario where the reduced rate for essential goods, such as food, is maintained. The report, cited by the “Süddeutsche Zeitung”‘s Wednesday edition, details a model where the general VAT rate rises by three percentage points, moving from 19% to 22%. Simultaneously, the reduced rate drops by two percentage points, from 7% to 5%.
Researchers from the Böckler Foundation analyzed official statistics to determine what this would mean for different income brackets’ average spending. For instance, a single parent with one child earning approximately €3,900 gross per month would find themselves paying €20 more in VAT. Similarly, a single earner bringing home just under €3,000 would face an increase of €14. For both of these lower-income groups, this equates to a loss of roughly 0.5% of their gross salary.
By contrast, the impact is smaller for higher earners. A single individual earning more than €13,000 would also pay an extra amount approaching €40 in VAT. However, when measured against their gross income, this shortfall represents only 0.3%, a smaller percentage loss than what was calculated for the lower-income groups.
Currently, the federal government is reportedly considering using the revenue generated from a VAT increase to finance a reduction in personal income taxes.