Cem Özdemir cannot be accused of a lack of persistence.

Every few months, sometimes every few weeks, the Minister of Agriculture repeats his call for the VAT on fruit, vegetables and legumes to be scrapped.

This step would not only relieve consumers financially, according to the message from the Green politician, but also promote the desired change in diet away from meat and towards a more plant-based diet.

Most recently, Özdemir used the Green Week agricultural show, which will be held in the Berlin exhibition halls until January 29, to emphasize his demands once again.

Julia Loehr

Business correspondent in Berlin.

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Manfred Schäfers

Business correspondent in Berlin.

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He's not the only one who would like to turn the VAT screw, on the contrary.

Whenever a crisis is looming in Germany, the call for relief on value added tax, which is correctly called sales tax, quickly comes up.

During the corona pandemic, rates were reduced from July to December 2020, the regular rate from 19 to 16 percent, the reduced rate from 7 to 5 percent.

Relief for plant-based foods?

For restaurants, the rate of 7 percent, which was reduced during Corona times, still applies today.

In the summer of 2022, the government tried to dampen displeasure with the planned gas levy with a reduction in VAT on gas.

The surcharge is history, the reduced tax rate of 7 percent is to apply until spring 2024.

So why not simplifications for plant-based foods as well?

The Federal Environment Agency expressly supports Özdemir.

The authority calculated that consumers would be relieved by EUR 4 billion if the tax on fruit, vegetables, cereals and vegetable oils were eliminated.

The basis for this estimate is the income and consumption sample from the Federal Statistical Office, says the Federal Environment Agency on request.

Similar to the Ministry of Agriculture, they are convinced that a tax cut would change shopping behavior.

"One study estimates that the increased consumption of plant-based products as a result of the proposed VAT abolition could be 1.1 percent for higher-income households and 1.3 percent for lower-income households," writes a spokeswoman.

The Ministry of Finance is cautiously opposed

Özdemir can demand a tax break and thus score political points, someone else is responsible for this: Christian Lindner.

What does the liberal say about this?

The Ministry of Finance, which he leads, says cautiously negatively: "No further changes are currently planned for value added tax." The system is not suitable for achieving individual socio-political goals.

Ask his economic advisor Lars Feld.

The economist does not make a den of murderers out of his heart.

"I don't believe in further exceptions to the standard rate or even the reduced rate for VAT," he says of the FAZ. This would lead to further distortions, if you think of the input tax deduction alone, but also beyond that.

To understand this, you need to know how VAT works.

When it comes to sales tax, the Treasury strikes every time a product is traded.

This favors corporations that organize everything under one roof, from the extraction of raw materials to sale to the end consumer.

That's why there was a change in the 1960s: Only the added value is now charged at every level of trade.

Entrepreneurs can get back the tax burden on the purchased goods from the tax office, this is the so-called input tax.

Only the name of the law was not changed at that time.