VAT Waiver Could Boost Demand

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VAT Waiver Could Boost Demand
VAT Waiver Could Boost Demand

Video: VAT Waiver Could Boost Demand

Video: VAT Waiver Could Boost Demand
Video: Getting Towards An End-to-End Technology Solution on VAT for Europe 2024, March
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The car expert Ferdinand Dudenhöffer has suggested waiving VAT due to the corona crisis. This could boost private demand again.

As the scientist from the University of St. Gallen said, VAT should be suspended for nine months on all products worth 20,000 euros and more. Since a good 70 percent of the new cars sold in Germany would come from the group of German car manufacturers as well as Ford and Opel, the German auto industry would benefit in particular from this temporary VAT suspension.

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Dudenhöffer sees an additional advantage of such a VAT suspension in the fact that no financial loans have to be taken out. “Tax revenues will be reduced, but only if expenditures are made at the same time,” says the scientist. The VAT suspension could also mean a further boost for electric mobility in Germany. Together with the state purchase premium of 6,000 euros, this would create an attractive offer.

New sales models required

Dudenhöffer also called on the carmaker to respond to the crisis with new sales models. The majority of car manufacturers hardly offer any car subscriptions or subscription models. “The car manufacturers have to become more agile, have to become faster and, with inexpensive car subscriptions, pull the cart out of the mud for their own part.” So-called car subscriptions contain all the monthly costs of a car apart from fuel costs.

In addition, leasing contracts with extraordinary protection against dismissal, for example in the event of job loss, are desirable.

End the slump in demand

For Dudenhöffer, the federal government would currently do everything possible with a package of measures such as short-time work allowance to avoid large-scale bankruptcy of companies. That is welcome and a sensible first aid. But the slump in demand could not be resolved. But with the VAT waiver, private demand for higher quality consumer goods could be stimulated.

Dudenhöffer thinks little of the “helicopter money” proposed by US President Donald Trump to stimulate the economy. The recipient would not “not spend this money on high-quality consumer goods, but rather put it on the high edge”, believes the scientist.

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