Value added tax (VAT) in Germany may be increased to 21 percent. Medianews.az reports that this was stated by Marcel Fratscher, head of the Institute for Economic Research, a prestigious economic research center in the country.
He noted that the government may increase VAT by 2 percent in order to eliminate the expected budget deficit of 130 billion euros in 2027-2029.
Currently, VAT in Germany is 19 percent.
Marcel Fratscher emphasized that although such a decision may be fiscally effective, it could have severe social consequences: “Because the VAT increase negatively affects lower-income population groups more.”
Marcel Fratscher also criticized the political parties forming the government for attempting to prioritize indirect tax increases as an easy way out.
He said that to eliminate the budget deficit, it is necessary not only to increase taxes but also to consider reducing subsidies.