19% VAT: Goodbye to Affordable Dining in Berlin?
The VAT Hike and Its Impact on Germany's Gastronomy and Culture
As 2024 starts to unfolds, the German Bundestag’s decision to revert to the original 19% value-added tax (VAT) for restaurants and cafes has become a reality, leaving behind the temporary relief of the 7% rate during the harsh COVID years. Now, the average meal cost is expected to increase by approximately €1.2- €2 , adding to concerns about escalating living costs.
Keep in mind that school and university canteens (the "Mensas") will also be affected, potentially impacting their budgets and the quality of food served. However, takeaways, delivery companies or spaces with no seats (only standing spaces) won't be affected by the VAT rise.
A Chorus of Concern: Voices from the Industry
The repercussions of this move extend beyond the mere adjustment of figures. Critics fear this change will be catastrophic for restaurants across Germany, already grappling with the repercussions of inflation and a continental economic downturn. The hospitality industry is facing a harsh dilemma: to either increase prices, potentially alienating their customer base, or absorb the costs, risking their financial stability.
Ingrid Hartges of DEHOGA ( “Deutscher Hotel- und Gaststättenverband” or the German Hotel and Restaurant Association), paints a grim picture: "12,000 companies will not survive." The hospitality industry, particularly hard-hit during the COVID-19 pandemic and now battling soaring energy costs, finds itself in dire straits. Owners, like Philipp Satzer of Alt-Berliner Gasthaus Julchen Hoppe, lament the broken promises and skewed priorities, highlighting the disparity between the seemingly endless funds for wars and the scrutiny over every cent by working citizens.
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Another Perspective: The Debate Over Fiscal Justice
However, not all see this move as unjust. According to a ZEW analysis, the return to 19% VAT is both economically sound and socially just. The subsidy from the reduced rate, resulting in substantial annual tax losses, is viewed as no longer justifiable in a post-pandemic landscape where other sectors face similar challenges. This perspective underscores the broader debate on fiscal responsibilities and the role of government in steering the economy through tumultuous times.
Bracing for Impact: The Consumer's Dilemma
As restaurants inevitably pass on the costs, consumers brace for a "price shock." With budgets already squeezed by the rising cost of living, many might opt to dine at home, further exacerbating the industry's woes. The fear is palpable: a shift in dining culture, job losses, and a potential wave of insolvencies. The decision not only affects restaurant owners but also the broader workforce, the everyday consumer and of course, Berlin’s vivid atmosphere.
The coming months will be telling, as the industry, government, and consumers navigate this new landscape. Will the government reconsider, or will restaurants and diners alike have to adapt to this new, costlier reality? Only time will tell, but one thing is clear: the dining experience in Germany is set for a significant transformation.
See what our community thinks about the 19% VAT hike:
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