Inflation is reaching new heights, squeezing the budgets of families and people on low incomes. Social and consumer organisations are therefore calling on the government to step in over the growing cost of living crisis and reduce Value Added Tax (VAT) on food in Germany to zero. 

Government asked to scrap VAT on fruit, vegetables and legumes

With the cost of certain consumer products rapidly rising - and new data on producer prices suggesting that further price hikes could be on the horizon - the social association VdK, the Federal Association of Consumer Organisations (vzbv) and the German Diabetes Society have all called on the federal government to make use of a new EU regulation and scrap VAT on certain food items. 

The president of VdK, Verena Bentele, said that the high inflation rate is pushing more and more people to their financial limits, with certain groups like low earners, pensioners and recipients of basic social benefits increasingly forced to choose between paying for their energy bills or for their groceries. 

“The VdK therefore calls for a drastic reduction in VAT on staple food items, to zero percent. The federal government must make full use of this opportunity, which is now available to all EU member states.” 

The Federal Association of Consumers backed this suggestion, calling for VAT to be temporarily abolished on fruit, vegetables and legumes to cushion households from the effects of rising food prices. They added that this would also make it easier for people to eat healthily.

The German Diabetes Association made a similar demand, stating that the government should do all in its power to enable people to access healthy foodstuffs. They further suggested that manufacturers of sugary drinks and other unhealthy products could be asked to pay a surcharge to help cover the shortfall. 

Consumer prices rising rapidly in Germany

Normally, the EU Value Added Tax System Directive requires all member states to set uniform VAT rates: a regular rate of 15 percent, and a reduced rate of at least 5 percent. Complete exemptions from the tax can only be granted in specific instances. Last week, however, the EU waved through an amendment that allowed member states to exempt food from VAT. 

Prices have skyrocketed in Germany and the rest of the world since Russia first invaded Ukraine nearly two months ago, and there is no sign of the situation easing anytime soon. Figures from the Federal Statistical Office (Destatis) show that energy and food prices have been particularly affected, with food costing on average 6,2 percent more in March 2022 than a year earlier.