Monika Schnitzer, who chairs the Expert Council for Assessing Overall Economic Development, has called for the reversal of the Value Added Tax (VAT) reduction implemented for the gastronomy sector. Speaking to “Spiegel”, Schnitzer stated that the measure costs approximately 3.4 billion euros annually and, critically, is failing to save the local inns and traditional establishments as promised. Instead, the benefits have disproportionately accrued to large chains such as McDonald’s and Burger King. She labeled the subsidy “one of the most superfluous ones in a long time.”
Schnitzer noted that the federal government originally lowered the food service tax as part of broader reforms, but the coalition has since announced cuts to subsidies. She believes any aid that drives incorrect behavior should be eliminated, citing the diesel tax reduction as an example. She argues that the previous federal government in 2023 should have completely abolished the diesel tax, not just the subsidy for agricultural diesel. This, she claims, might have prevented the drastic backlash from farmers and the subsequent policy reversal by the coalition government.
Advocating for aggressive reform, Schnitzer stressed the need for clear warnings to the public regarding the gravity of the current economic situation and the consequences of inaction. “Many people are unaware that we are essentially living on borrowed time,” she stated. She emphasized that Germany has spent too long running on worn-out infrastructure instead of investing in preventative measures. She adds that instead of addressing these systemic issues, the economy continually offsets rising prices and costs, resulting in a reliance on debt.
Her concerns extend to technological progress, particularly in future technologies. Schnitzer highlighted the dizzying pace of developments in artificial intelligence in the United States, noting that Germany requires the necessary infrastructure just to participate meaningfully. This lag in technological capacity is currently her greatest worry.
The professor from the Ludwig-Maximilians-Universität in Munich also expressed skepticism regarding the potential for the German economy to recover, even in light of an announced peace agreement between the US and Iran. While she acknowledges that a signing would be positive, she remains doubtful that the agreement will hold up. Consequently, she advises against rising expectations, stating that one can only be relieved if the economy avoids incurring even greater damage than it has already suffered.
