The proposed permanent reduction in value-added tax (VAT) on restaurant meals is facing staunch opposition from the leading union representing the hospitality sector, raising critical questions about its economic and social impact. Guido Zeitler, head of the Gastrogewerkschaft Nahrung Genuss Gaststätten (NGG), argues that the measure, estimated to cost the state treasury nearly four billion euros annually, represents a misallocation of resources that disproportionately benefits high-end consumers while failing to address the core challenges faced by hospitality workers.
Zeitler’s critique focuses on the symbolic disconnect between the tax break and the lived realities of the industry’s workforce, many of whom are often accused of pricing themselves out of affordability. He emphasizes that reducing VAT is essentially a subsidy that dilutes efforts to provide crucial support mechanisms – affordable housing, improved low wages and accessible public transportation – upon which a significant portion of the sector relies.
The NGG chief’s skepticism is rooted in past experience. He points to the 2010 VAT reduction for hotels, highlighting the fact that the resulting cost savings largely ended up in employers’ pockets rather than benefitting employees. This historical precedent fuels concerns that the current proposal will follow a similar pattern, offering a superficial economic boost while failing to address underlying issues of wage stagnation and precarious employment conditions.
The Dehoga, the hospitality employers’ association, has already signaled its intention to grant businesses autonomy in deciding how to utilize the tax reduction, suggesting that price reductions on menus are not guaranteed. This lack of commitment to consumer benefit further undermines the argument for the VAT cut, raising doubts about its intended purpose.
The debate underscores a growing tension between government initiatives designed to stimulate economic growth and the need for targeted interventions that directly address the financial security and well-being of vulnerable workers.