Proposal from the Federal Environment Agency: relief by eliminating VAT

What is environmentally friendly should become cheaper, what is harmful to the environment more expensive. The Federal Environment Agency wants to achieve this by changing VAT. According to the plans, the tax on things like fruit could be eliminated entirely.

The Federal Environment Agency is proposing an ecological relief package for citizens via VAT. By exempting public transport or plant-based foods such as fruit and vegetables, private households could save six billion euros a year, said the President of the Federal Office, Dirk Messner. The tax should also be dropped on solar systems, as well as on grain products and vegetable oils.

Lower tax on repairs

In addition, improving heating systems or repairing shoes or bicycles should only be subject to the reduced tax rate of seven percent instead of the current 19 percent. “What is environmentally friendly should become cheaper, what is environmentally harmful should no longer be subsidized by the state with taxes that are too low,” said Messner.

The “climate and environment relief package” focuses on the sharp rise in food prices and mobility costs. The background to the proposal is also current changes in European law, which also legally secure the proposals.

Regular 19 percent for meat

In return for the relief, subsidies for environmentally harmful products should be phased out – but only at a later date. The reduced VAT of seven percent for meat should be replaced by the regular 19 percent in the future. Vegetable products only have a fraction of the climate footprint compared to animal products: for example, seven to 28 kilograms of greenhouse gases are emitted for one kilogram of beef, and less than one kilogram for one kilogram of vegetables.

The Federal Environment Agency argues that low-income households would benefit most from the VAT exemption on plant-based foods. In addition, this would also help people who were relatively unfavored by the two previous relief packages, such as pensioners with low incomes. A VAT exemption for public transport would also help poorer sections of the population in particular, who are often dependent on public transport. They would be relieved to an above-average extent if public transport and regional and long-distance transport by bus and train became cheaper.

Business representatives protest

However, some of the proposals are not well received, especially in business. This applies, for example, to the demands of the Federal Environment Agency for the reduction of climate-damaging subsidies in transport, among which the authority counts, among other things, the diesel privilege and the commuter allowance. Those who demand higher fuel prices, the abolition of the commuter allowance and a car toll have lost all connection to the reality of life of the hard-working people in our country, criticized the Federal Association of Medium-sized Businesses, for example.

Gitta Connemann, Chairwoman of the CDU and CSU SME Union, goes one step further. In her opinion, the Federal Environment Agency often exceeds its competence with its political demands.

An authority should be neutral and only act on the basis of data and science, according to the CDU member of the Bundestag: “Unfortunately, the Federal Environment Agency often does not meet this requirement for objectivity and professionalism. Fundamental ideological criticism is not uncommon.”

With information from Hans-Joachim Vieweger, ARD capital studio