Germans oppose VAT rise to fund income tax cuts, survey finds

Tuesday 26 May 2026 - 09:45

A majority of people in Germany are skeptical about proposals to increase value-added tax (VAT) in order to finance reductions in income tax, according to a recent survey conducted by the Nuremberg Institute for Market Decisions (NIM).

The study presented respondents with a hypothetical reform in which monthly income tax would be reduced by around €100, while VAT would increase household costs by approximately €40 per month. Only about one in four participants viewed the proposal positively, while a significantly larger share expressed negative opinions.

The findings suggest that public acceptance of tax restructuring remains limited, especially when it directly affects household spending. More than half of respondents said they would be more likely to increase savings rather than boost consumption if such a reform were introduced.

Concerns were particularly strong among older citizens and lower-income households. Among respondents earning less than €2,000 per month, support for the proposal was especially low, while opposition remained high even among higher-income groups.

Economists note that VAT increases often have a direct impact on consumer prices, which can influence spending behavior. The institute warned that higher VAT could discourage consumption and weaken private demand in the economy.

Germany is currently considering broader tax reforms in the coming years, including possible adjustments to income taxation. However, the survey highlights the political and social challenges of balancing tax relief with revenue generation.