Survey: Germans Oppose VAT Hike to Finance Planned Income Tax Cuts
Public Opinion on VAT Increase for Income Tax Reform
By Maria Martinez
Survey Findings and Public Sentiment
BERLIN, May 26 (Reuters) - Germans are largely opposed to raising value-added taxes to finance income tax relief, with many saying such a move would make them save more rather than spend, a survey by the Nuremberg Institute for Market Decisions (NIM) showed on Tuesday.
Details of the Proposed Tax Reform
In the study, respondents were presented with a scenario in which income tax was cut by €100 ($108) per month while higher VAT added €40 in monthly costs. Only one in four viewed such a reform positively, while 42% assessed it negatively.
Germany plans an income tax reform from early 2027, with some experts proposing a VAT increase from 19% to 21% to help finance it.
Demographic Breakdown of Opposition
Opposition was strongest among older people and those on low incomes. Among respondents with less than €2,000 available per month, 18% supported the idea and 48% opposed it. Even among those with incomes of 4,000 euros or more, opposition outweighed support.
Impact on Private Consumption
"A VAT increase would be the nail in the coffin for private consumption in Germany," the institute said.
Behavioral Responses and Expert Commentary
More than half of respondents said such a reform would not boost consumption but increase their propensity to save.
"Many people notice rising prices in everyday life immediately and react sensitively to them — much more strongly than to additional income leeway," NIM study leader Katharina Gangl told Reuters.
(Reporting by Rene Wagner, writing by Maria MartinezEditing by Ludwig Burger)
