During the current debate surrounding tax reform, the DGB is advocating for the elimination of the reduced value-added tax. Yasmin Fahimi, the chairwoman of the DGB, told the “Tagesspiegel” (Saturday edition) that lowering the reduced VAT from seven to zero percent “would be a strong signal, especially for low-income earners”. She argued that for those with smaller incomes, “a reduction in VAT on items such as food and energy would help much more than a cut in income tax”.
To fund a lower value-added tax, the DGB proposes making “mega-rich and billionaires” responsible. According to Fahimi, she suggested “a much higher VAT on luxury goods” such as very expensive watches, yachts, jewelry, or luxury cars. This, she stated, would only burden those who can afford it. She concluded, “Overall, the mega-rich and billionaires must be made to contribute much more, rather than burdening employees and consumers”. Furthermore, raising the standard VAT from 19 to 21 percent is described as “poison for the economy and ultimately a redistribution from bottom to top”.
Fahimi called for a fundamental tax reform from the black-red coalition. The DGB head stated, “We need an income tax reform aimed at relieving burdens on small and medium incomes while simultaneously taxing top incomes more heavily”. Specifically, the DGB wants to raise the basic tax-free allowance-the threshold at which income tax is paid-to “a very good 15,000 euros and then let the tax rate increase more slowly”.
The DGB also advocates for a higher top tax rate, but one that would only apply once a higher income level is reached. Fahimi indicated that “the top tax rate should rise to 49 percent, but only starting from a taxable income of 87,000 euros per year, which corresponds to about an annual gross salary of 100,000 euros”. This measure, according to her, would alleviate the tax burden for “95 percent of incomes”.