Dhe federal government is already cushioning the sharp increase in prices with aid packages for recipients of social benefits and employees. According to the Federal Minister for Food, Cem Özdemir (Greens), that is not enough: now he also wants to abolish VAT on fruit, vegetables and legumes. “If we make fruit and vegetables cheaper, we not only ease the burden on consumers relatively cheaply, but also promote healthy nutrition through the steering effect obtained,” Özdemir told the German Press Agency. “That would be a double dividend proposal, which is how I prefer it.”
In doing so, he supported the demands of social and consumer associations and doctors. The “German Press Agency” had confronted Özdemir on Thursday. The president of the VdK social association, Verena Bentele, had previously pointed to a new EU directive that will allow a zero percent tax on some foods as part of European tax rules. However, the retail association HDE disagreed, noting that the directive would only allow this from 2025 onwards. At the same time, she also rejected the proposal on the merits: targeted social transfers are the best way to cushion price rises for low-income households.
“Healthy eating should not be a matter of money”
Bentele had already applied for tax exemption in January after an average annual increase of 3.1 percent was determined for 2021: many people would have to “now have to spend all their income on food, heating and rent” – a diet “inevitably falls by the wayside”. question of money”. The coalition must “abolish VAT on fruit and vegetables once and for all”.
The topic is receiving new attention due to the expectation that prices will continue to rise. The main reason behind the 7.3 percent inflation rate in March was the almost 40 percent rise in energy prices. But some foods also became very expensive: vegetable oil by 30 percent, fresh vegetables by 15 percent and coffee by 9 percent. Food prices increased an average of 6.2 percent.
In addition to the debate about good food, the sharp rise in prices raises the question of to what extent basic security benefits still cover the guaranteed minimum requirement: the annual adjustment from January 1 brought only an increase of 0.7 percent -calculated on the basis of the evolution of prices and wages from July 2020 to June 2021. The so-called standard price index increased by only 0.13 percent during this period and accounts for 70 percent of the result. Inflation, which has increased considerably since July 2021, will not be taken into account automatically until January 2023.
However, since 2020 the government has granted some special surcharges to beneficiaries of basic security: first there was a “corona bonus” of 300 euros per child, which Hartz IV households also received. This was followed by a one-time surcharge of EUR 150 for adults and EUR 150 per child. Now another single surcharge of 100 euros is planned for July 1, as well as a new monthly surcharge of 20 euros per child. In any case, the social authorities pay the increased rents and heating costs for the beneficiaries of basic security.
Mathematically, the surcharges should cover the additional costs remaining due to high electricity and food prices. Previously, the situation was more difficult for households just above the need limits that do not receive transfers. However, the government’s most recent relief package provides, among other things, a flat-rate energy cost allowance of €300 per employed person. This now also cushions much of the extra load for them, at least for the time being.