Die ermäßigte Umsatzsteuer in der Gastronomie – Bewertung und subventionspolitische Schlussfolgerungen

After a controversial debate, the temporary application of the reduced VAT rate for the catering industry in Germany expired at the end of 2023. The authors shed light on this case study, which is instructive from a public economics and political economy perspective. They explain the tax-systematic background that must be taken into account when deciding on deviations from the standard rate in accordance with the VAT tax system. After the initial tax-systematic and political-economy considerations, all the arguments put forward by industry associations in favor of the reduction are examined. These concern (i) the crisis context of pandemic, energy crisis and inflation, (ii) business challenges in terms of predictability and labor shortages, (iii) unequal treatment with other EU countries and out-of-home sales and (iv) social aspects in terms of distributional effects, cultural assets, sustainability and health. Overall, the arguments in favor of a reduced tax rate are judged to be invalid. Based on the experience of the strong political resistance to the withdrawal of the temporary crisis-related tax subsidy, it is recommended that in future crises temporary financial aid should be given priority over tax cuts.