In response to the significant increases in food prices in recent months, social and consumer groups have been calling for the abolition of value-added tax on certain fresh foods.
The calls follow a recent amendment to EU law, which makes it now theoretically possible for member states to scrap VAT on fresh food.
Federal Agriculture Minister Cem Özdemir (Greens) has now also come out in favour of these proposals, saying he personally supports the renewed calls for the abolition of VAT on fruit, vegetables and pulses (such as beans, lentils and peas).
Özdemir told the German Press Agency: “In the debate on the first relief package, I had already indicated that a reduction in VAT on healthy foods would particularly benefit those who have little or no financial leeway.”
“If we make fruit and vegetables cheaper, we not only relieve consumers comparatively inexpensively, but we would also promote a healthy diet,” the Green politician said.
However, he added that putting such a measure into action would be a matter for the Ministry of Finance.
A temporary scrap of value-added tax on fresh food could help people with low incomes in particular as, according to the German Institute for Economic Research (DIW), they spend a larger proportion of their monthly income on food than people with high incomes.
President of the DIW, Marcel Fratzscher, told the Augsburger Allgemeine newspaper: “The German government should temporarily abolish the reduced VAT rate of seven percent, as this would make food and other basic necessities cheaper, and help people quickly and unbureaucratically.”
Criticism from economists and retailers
The proposed measure has received criticism from some quarters, however.
Vice president of the Kiel Institute for the World Economy, Stefan Kooths, told the Rheinischer Post newspaper that that rising prices reflect greater shortages that the state cannot eliminate.
“If the state wants to effectively do something about higher food prices, it should think about freeing up farmland,” he said.
The German Trade Association (HDE) also criticised the proposal. They said that an end of to food VAT – a so-called “flat” tax that charges the same to all households regardless of income – would favour those who are able to manage cope with the rising prices.
“Instead, the federal government should increase state benefits accordingly and, if necessary, make appropriate improvements in its relief package,” they said.