The proposal to drop value‑added tax on basic foods would give every household a modest monthly relief, economists say. Economic researcher Tobias Hentze from the German Economic Institute (IW) estimates that, depending on household size and shopping habits, households could save about €15 to €30 each month. On the other hand, he warns that the state would lose as much as €16 billion per year in tax revenue.
Tax specialist Friedrich Heinemann of the German Institute for Economic Research (ZEW) arrives at a similar conclusion. He estimates that individuals would save roughly €15 to €20 per month, while the government would see a roughly €17 billion annual loss.
Both researchers doubt that the full 7 % to 0 % cut would be fully passed on to consumers. Heinemann says that only about half to three‑quarters of the tax reduction would translate into lower prices for shoppers. Hentze points out that many affected products would see only a few cents price change, so merchants might absorb part of the cut, and that any savings would diminish quickly as higher production or wage costs are passed back into prices.
German Chancellor‑candidate Jens Spahn (CDU) has floated a complete elimination of the tax on staple foods. He says that, as part of a broader package, a zero‑percent VAT on essential groceries could help curb inflation, which he argues is rising again amid the cost‑driven pressures of the Iran conflict and higher oil and fuel prices.