The financial policy spokespersons for the Union and the SPD have rejected President Ifo Clemens Fuest’s proposal for a uniform value-added tax (VAT). According to Fritz Güntzler of the CDU, making staple foods like bread, milk, fruits, and vegetables more expensive before partially refunding the money through a new distribution mechanism would not simplify life for families or the administration. He states that he disagrees with the plan to tax basic foodstuffs at 19 percent.
While the SPD welcomes the intention of making the VAT system more socially fair, Frauke Heiligenstadt, the SPD parliamentary group spokesperson, argues to the “Tagesspiegel” that Fuest’s calculation is flawed. She contends that raising the VAT on basic foodstuffs by 12 percentage points-which is more than double the current rate-would simply make life more expensive for ordinary people.
To support her argument, the SPD politician provides this scenario: if a very frugal four-person family spends 100 euros on groceries in one week, it would cost 119 euros, not 107 euros. Over the course of a year, this translates to additional annual expenses of approximately 600 euros for the family. However, Fuest’s proposal only compensates for half of these extra costs. Instead of alleviating the burden on average earners, Heiligenstadt calls for greater tax equity, suggesting alternatives such as reforming inheritance tax or reintroducing wealth tax.
Clemens Fuest previously advocated for scrapping the existing reduced VAT rate of 7 percent. Instead, he proposed that all goods be taxed uniformly at 19 percent, with certain groups receiving targeted reliefs in return.
