Lower VAT had “only a marginal effect”
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In January the value added tax will be adjusted upwards again. The conclusion of the trade for the time with the lower rates is negative. A drugstore chain secretly raised prices again months ago.
Dhe trade draws a negative balance of the temporary VAT cut. “Overall, the tax cut could not do anything against the negative effects of the pandemic on consumption and so far has only had a marginal effect,” said Stefan Genth, General Manager of the German Retail Association (HDE), WELT AM SONNTAG. For most companies, the effort was significantly higher than the benefit.
The drugstore chain Rossmann corrected the general price cut requested by politicians months ago. “We withdrew the three percent discount in the last week of September – without our customers noticing it,” said the company WELT AM SONNTAG.
On January 1, 2021, the VAT rates, which have been lowered for half a year, will be increased again from 16 percent to 19 percent and from five percent to seven percent. However, HDE managing director Genth does not expect a wave of price increases. “Given the high level of competitive pressure, the scope for price increases will be extremely limited,” he said.
For fashion and shoes, an unprecedented price slide is even expected in the coming weeks. “If the shops are allowed to reopen, there will be a huge wave of discounts,” said Axel Augustin, the newspaper’s spokesman for the textile trade association. The industry is sitting on mountains of unsold goods, we’re talking about 300 million parts.
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