From 1 January, the ‘normal’, ‘intermediary’ and ‘reduced’ rates will be lowered from 17% to 16%, from 14%-13% and from 8%-7%, respectively. The government hopes to increase purchasing power and reduce inflation.
But the ‘super-reduced’ rate of 3% remains untouched, and not lowered to 2%, as would be expected.
During Thursday’s Chamber meeting, Marc Goergen, MP for The Pirate Party, asked the finance minister for an explanation.
“Why is the tax on food not reduced to 2%? Our everyday needs. 17% to 16%, that effects cars, alcohol, cigarettes. But tax on our everyday needs are not being reduced. Why was this not done?”
Finance minister Yuriko Backes did not have a clear answer.
“The 3% was a comprise during negotiations. We also had to look at the costs of these measures,” she said. The cost of the entire financial package is €352 million, with €317 million for the reduction in VAT.
Gilles Roth of the CSV underlined that it’s important for the VAT reduction measure to make a difference in consumers’ wallets.
“Business are getting a VAT reduction. I’m thinking of cars or the construction sector, those are active sectors. But businesses also have to join in so that the inflation curve can be throttled down,” Roth said. “Otherwise there’s no point.”
