Friday, May 6, 2022

Minister of Agriculture Özdemir for – Rising food prices: FDP against reducing VAT

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Groceries are getting more and more expensive Social organizations and the Left Party are calling for a reduction in VAT. The Green Minister of Agriculture is also in favor of it. But the FDP sees “no specific measure” in this.

A VAT exemption for groceries as a relief for sharply rising prices is met with skepticism in the traffic light coalition. FDP faction leader Christian Dürr told the “Neue Osnabrücker Zeitung”: “Unfortunately, the VAT reduction is not a specific measure to relieve people with low incomes.” When asked on Friday, the FDP-led Ministry of Finance referred to billions in packages with other relief that had already been announced. The SPD also emphasized that these should now be implemented as quickly as possible.

Social and consumer organizations had called on the government to use new EU rules and set VAT to zero percent for food such as fruit and vegetables. Minister of Agriculture Cem Özdemir (Greens) supported the demands: “If we make fruit and vegetables cheaper, we not only relieve the burden on consumers comparatively inexpensively, but also promote healthy nutrition through the steering effect gained.” Özdemir also referred to the responsibility of the finance department.

Agriculture Minister Cem Özdemir (archive): “If we make fruit and vegetables cheaper, we not only relieve the burden on consumers comparatively inexpensively, but also promote healthy nutrition through the steering effect gained.” (Source: photothek/imago images)

The financial policy spokesman for the SPD in the Bundestag, Michael Schrodi, told the German Press Agency that the two packages had already brought billions in relief for citizens. “In this way we support those who are particularly affected by the high prices.” The task now is to implement the packages as quickly as possible, which is being worked on at full speed. “Of course we will keep an eye on further developments and, if necessary, we will not hesitate to take further targeted measures if this should become necessary.”

The FDP politician Dürr emphasized that the relief packages contained measures for families and households that had a particularly difficult time. “It definitely makes more sense than a patchwork quilt for VAT.” Among other things, he mentioned a heating subsidy, a child bonus and tax breaks for lower incomes retroactive to January 1st.

Left parliamentary group leader Dietmar Bartsch, on the other hand, told the “Tagesspiegel” (Friday) that the second relief package was not enough either. “The temporary suspension of VAT on staple foods is a measure that would take effect quickly, something like this is needed now.” For the German Institute for Economic Research (DIW), the head of the macroeconomics department, Alexander Kriwoluzky, suggested in the Tagesspiegel (Saturday): “It would make sense to have a one-time food allowance of 100 euros for transfer recipients.”

Left parliamentary group leader Dietmar Bartsch: Even the second "relief package" is not enough.  (Source: imago images/Political Moments)Left parliamentary group leader Dietmar Bartsch: Even the second “relief package” is not enough. (Source: Political Moments/imago images)

The standard rate for VAT is 19 percent. The reduced rate of 7 percent subsidizes products that serve the common good – including staples such as milk, meat, fruit, vegetables and baked goods. The general secretary of the farmers’ association, Bernhard Krüsken, said: “Ideally, all food should be subject to the reduced tax rate.”

However, it is just as important to finally solve the “blockade” in a financing system for the conversion of animal husbandry, he made clear. The coalition is discussing a model so that farmers are not left with additional costs for higher standards. Among other things, an animal welfare tax on animal products is under discussion. A surcharge of 40 cents per kilogram of meat would be conceivable.

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