According to a study by the union-affiliated Böckler Foundation, raising value-added tax (VAT) would proportionally burden low-income earners more heavily than top earners. This finding holds even within a model that reduces VAT on essential goods like food, as reported by the “Süddeutsche Zeitung” (Wednesday edition). Specifically, the general VAT rate would increase by three percentage points, rising from 19% to 22%, while the reduced rate would drop by two percentage points, from 7% to 5%.
Researchers at the Böckler Foundation analyzed official statistics to determine the impact on the average shopping baskets of different income groups. Under this scenario, a single parent with one child earning approximately €3,900 gross monthly would face an additional VAT cost of €20 per month. For a single individual earning close to €3,000 gross, this increase would amount to €14. Crucially, for both of these low-income groups, this represents a loss of about 0.5% of their gross salary.
The calculation looks different for higher earners. An individual single earning over €13,000 would also pay an increase of nearly €40 in VAT. However, when measured against their gross salary, this decrease would equate to only 0.3%, making it smaller than the proportional loss experienced by the low-income groups.
Currently, reports indicate that the federal government is considering financing a reduction in income tax by implementing an increase in VAT.
