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Consumer advocate: Many companies are putting VAT benefits in their own pockets

2020-09-30T08:14:58.280Z

Sales in the German retail sector are increasing more clearly than expected. But a warning from consumer advocates is mixed in with the good news.



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Many tempting offers: shop window of a fashion store in Friedrichshafen

Photo: Felix Kästle / DPA

Three months after the temporary VAT cut, consumer advocates have drawn a critical interim balance.

"The sales tax cut announced as a bang was probably wishful thinking. Many companies preferred to put the reduction in their own pockets instead of passing them on to consumers," said the head of the Federal Consumer Association (vzbv), Klaus Müller, to the "Stuttgarter Nachrichten" "and the" Stuttgarter Zeitung ".

German retailers are currently benefiting from a surprisingly significant increase in sales.

In August they took 3.4 percent more than in the previous month, as the Federal Statistical Office announced on Wednesday.

Adjusted for prices (real), the increase was 3.1 percent.

Economists had only expected an increase of 0.5 percent here after there had been a decline in the two previous months.

On July 1, VAT was reduced until the end of the year to stimulate consumption.

Many dealers have promised to pass the reduction on to customers.

Vzbv boss Müller, however, referred to a sample from the Bremen consumer advice center, which suggests that the VAT reduction is only partially affecting consumers.

Almost half of the prices have not fallen

"The prices of almost half of the products examined have remained the same or even increased since July 1st, for example for an orange lemonade, a menu at Burger King or white walls."

On the other hand, products such as a T-shirt, an iPhone or a washing machine became cheaper.

In the opinion of the vzbv board of directors, there would have been significantly better means to relieve consumers, for example a greater reduction in electricity costs or a higher child bonus.

The black-red coalition had lowered VAT as part of its € 130 billion economic stimulus package in order to contribute to the recovery of the economy in the corona crisis.

The regular VAT rate is 16 percent instead of 19 percent until the end of the year.

The reduced rate that applies to everyday goods such as groceries fell from seven to five percent.

At the turn of the year, the rates rise again to the usual level.

From January to August, retailers increased their sales by 4.2 percent despite the corona crisis.

However, the gap within the individual industries remains enormous.

The business with textiles, clothing, shoes and leather goods collapsed by 25.2 percent, while the Internet and mail order business grew by 21.2 percent.

The German trade association (HDE) recently warned of a wave of bankruptcies.

This could especially come if there is a second wave of corona infections with a renewed lockdown with business closings.

This had already led to a sharp drop in sales in March and April. 

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kig / Reuters / AFP

Source: spiegel

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