BERLIN (dpa-AFX) – The ecological VAT reform proposed by the Federal Environment Agency is met with opposition from tax experts and retailers. “I think that’s very problematic from the point of view of EU law,” said the chairman of the German tax union, Thomas Eigenthaler, to the “Handelsblatt”. The EU VAT Directive does allow for very limited exceptions to the tax rate, but not to such an extent. The proposal also opens the door wide for tax bureaucracy and also invites “tax evasion on a large scale”.
The Federal Environment Agency had proposed aligning VAT more closely with ecological and social criteria. Meat should become more expensive, fruit and vegetables cheaper. Vegetable staple foods such as fruit, vegetables, cereal products and vegetable oils as well as public transport should therefore be completely exempt from VAT. In return, the reduced VAT of seven percent for meat and other animal products should in future be taxed at the regular 19 percent.
Criticism of the initiative also came from the German Trade Association (HDE). “VAT is the wrong adjustment screw. We don’t believe in suggesting a certain type of diet to customers via the amount of VAT,” said HDE General Manager Stefan Genth to the “Handelsblatt”. “What people want to eat, when and how much is a private decision from our point of view,” he added. Genth also warned of “considerable costs” for companies. “The VAT law in Germany is already complicated and the administration with costs of one to four percent of the turnover for the company is expensive enough,” he said./shy/DP/mis