If the actor Bill Murray, in his role as a television reporter, were not to report on American marmots but on German politics, then his well-known film could revolve around the reduction in sales tax.

Because she says hello almost every day now.

In view of the high inflation, the consumer centers want a lower value-added tax on some foods, and Minister of Agriculture Özdemir agrees.

The Union calls for a VAT reduction on electricity.

And the drugs cost too much?

Then the VAT will have to go down.

It's no wonder that it's constantly being called for, since it's often successful.

The following have received a reduction in VAT: the hoteliers for overnight stays, the railways for the climate, the entire German economy for overcoming the consequences of the pandemic and the feminists for tampons.

Value-added tax reductions take effect

But as universal as the demand is, you have to differentiate as much as to whether it achieves much.

One thing is certain: VAT cuts usually work.

And that would be a problem this time.

Let's stick with tampons for a moment.

In these weeks, too, the fairy tale is being told that the companies would then have raised their prices in return.

There are a few such examples, but tampon prices did fall across the board, especially when the law had already been passed but had not yet come into force.

On the official date, of course, there were hardly any price reductions to be seen.

If you don't believe it, just look it up at the Federal Statistical Office.

A similar picture emerges from the investigations into the Corona period, when VAT was reduced for six months.

Much of the tax cut was actually passed on to consumers back then.

However, the hoped-for effect, the strengthening of the economy, remained small.

That's because price cuts don't always help.

The difficulties in the pandemic weren't so much because consumers didn't want to shop — it was more because they couldn't shop.

The problem is scarcity

This brings us to the current inflation.

Although it is enormous, it is mainly due to the fact that many things are becoming scarce these days.

If possible, Germany no longer wants gas and oil from Russia, and rightly so.

Now groceries are rising in price, also because their production and packaging are becoming more expensive.

Other goods are becoming scarce and expensive because, given the tough Chinese lockdowns, they can no longer come to Germany from East Asia.

Either way, Europe has to accept that things are getting scarce and that you can't buy as much of them as you used to.

The world is losing prosperity right now.

You can't avoid it, not even with tax cuts.

On the contrary: anyone who artificially lowers the price for scarce things is more likely to stop the necessary drop in demand.

Of course, politics must help poor people to deal with the increased prices.

It does this better by paying them money that the recipients can decide how to use.

In this way, the money also hits the needy more precisely.

Unfortunately, the German state is very poorly prepared.

Social law and tax law are so complicated that, even in good times, they take away the incentive to work for many poor people.

In bad times, this complexity makes it difficult to make one-off payments to those in need: Should you do it through Hartz IV or through taxes?

No matter how the policy goes, there are always some who benefit greatly and others who fall through the cracks.

It's high time to simplify all of this.

Then you could also reform the value added tax.

The whole system is complicated and full of unnecessary exceptions.

The fact that five different VAT rates can apply to Christmas trees is an anachronism that should be abolished.

But that has nothing to do with inflation.