UBA Proposes VAT Changes to Ease Household Burden and Boost Climate Protection
The German Environment Agency (UBA) has proposed several measures to reduce the burden on households and promote climate protection through changes to value-added tax (VAT).
The UBA suggests exempting public transport from VAT to disproportionately help lower-income individuals who rely on it. Similarly, it proposes exempting plant-based staple foods from VAT to encourage the consumption of fewer animal products, benefiting the climate and relieving private households by around 4 billion euros per year, with low-income households benefiting relatively strongly.
The agency also recommends waiving VAT for corporate donations to charitable organizations to reduce the destruction of usable returns. Additionally, it proposes exempting the delivery and installation of solar panels from VAT to promote climate protection measures.
The UBA further proposes reducing the VAT rate for the repair of shoes, leather goods, clothing, bicycles, and household textiles from 19 to 7 percent, and suggests tax incentives for heating modernizations and other energy-efficient renovations by taxing them at a reduced rate. Moreover, it proposes gradually phasing out subsidies for environmentally and climate-damaging products, such as taxing meat and other animal products at the regular 19 percent in the future.
