One of the most unexpected elements of the adopted package is the reduction of the value-added tax rate by three percentage points designed to soften the blow of what is likely to be the worst recession in Germany’s postwar history. From July 1 until the end of 2020, the standard rate of VAT will be reduced from 19 to 16 per cent, and the lower band cut from 7 to 5 per cent — a measure that will cost €20bn. Will this move have the desired effect, and will consumers now be able to buy at lower price? Stern.de asked Professor Dr. Martin Fassnacht to comment on this topic.
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