The traffic light coalition has agreed to let the VAT reduction for cafes and restaurants expire. The income limit for parental allowance is more generous.
November 17, 2023 | by Martin Greive and Jan Hildebrand
Demonstration to maintain the VAT reduction
© IMAGO/Manngold
Berlin The VAT for food in restaurants will be raised again to 19 percent at the beginning of the year. That’s what we have SPD, the Greens and the FDP have been notified, Handelsblatt learned from coalition circles. During the corona pandemic and the energy crisis, the tax for restaurants and cafés was temporarily reduced.
The industry had recently lobbied vehemently not to let the tax cut expire at the end of the year as planned. Given the high inflation and increased prices, she fears bankruptcies in the catering industry and job losses.
The FDP had campaigned for an extension of the VAT reduction. Also parts of the SPD were for it. But the Liberals were unable to prevail in the traffic light coalition. It was said in negotiating circles that the SPD and the Greens had pushed for VAT to be raised again. Also a suggestion from FDP the counter-financing in the budget has not changed anything.
The decision was made by the leaders of the traffic lights. It will be incorporated into the final discussions on the 2024 budget, which will run overnight from Thursday to Friday. The traffic light had recently negotiated several desired projects that should be included in the budget. But there is not enough money for all projects.
Traffic light agrees to increase the parental allowance limit
There has recently been a struggle for savings in parental allowance. The federal government originally proposed that in future parents with a taxable income of more than 150,000 euros per year should no longer receive parental allowance.
The traffic light has now agreed to increase these limits. From April 2024, parental allowance will only cease for incomes of 200,000 euros or more. From April 2025, the limit will be reduced to 175,000 euros.
In addition, the even greater increase in the basic tax allowance that Finance Minister Christian Lindner (FDP) has now called for will not come from the beginning of 2024, it was said. The FDP leader had suggested not only increasing the basic allowance to 11,604 euros as planned, but also increasing it to 11,784 euros. The child allowance should also increase more. This would have relieved taxpayers of an additional 1.94 billion euros. But the FDP was apparently unable to prevail in the traffic lights.
The VAT on food in the catering industry was reduced from 19 to seven percent during the corona pandemic in order to support the industry. Due to the energy crisis, the regulation was extended until the end of this year. The Ministry of Economic Affairs put the amount of tax missing from an extension at 3.4 billion euros.
Business associations, especially from the food production and catering sectors, had called on politicians not to increase the VAT again. The German Hotel and Restaurant Association (Dehoga) recently warned of around 12,000 business closures, price increases of an average of 18.2 percent, falling sales and fewer jobs if 19 percent VAT were due again from 2024.
First publication: November 16, 2023, 6:40 p.m.