Anticipated price hikes approaching the new year, as per consumer centers' expectations
In a recent statement, Klaus Müller, a board member of the Federal Association of Consumer Centres (VZBV), has voiced concerns about the effectiveness of the government's approach to supporting the economy during the ongoing corona crisis.
During the crisis, the value-added tax (Mehrwertsteuer) was temporarily reduced to stimulate the economy. However, Müller compares the current government support to a watering can, implying it is not effective or efficient. He further states that citizens benefit little from the value-added tax reduction, with only 60% of the benefits reaching consumers.
Müller suggests that the government should support citizens in a more targeted manner, such as through another child bonus. This targeted approach is also supported by the VZBV, who have warned of widespread price increases at the turn of the year. If the value-added tax is raised back to its original rate, retailers may use this as an opportunity for a general price increase.
Retailers who did not reduce their prices during the temporary value-added tax reduction may also increase prices at the turn of the year. The only solution, according to VZBV, is to watch closely for potential price increases at the turn of the year.
The refusal to extend the reduction of the VAT and return it to the original rate would likely come from government decisions, but specific actors who would deny the extension are not directly named. However, critiques of the government and management regarding financial policies exist, such as the negative stance of Lufthansa management against employee demands, indicating resistance to burdensome financial changes.
Despite these concerns, it is essential to note that the government temporarily reduced the value-added tax for six months to provide economic stimulus during the corona crisis. The VZBV's primary concern is ensuring that any support provided by the government reaches consumers effectively and does not lead to widespread price increases.
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