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VAT cut: Bonn people not in saving mode when shopping

VAT cut : Bonn people not in saving mode when shopping

Four weeks after the reduction of the value-added tax, the impulse to buy has failed to materialise for Bonn customers. Retailers are not satisfied either: Because the money saved while shopping is not even enough for an ice cream.

It was sold by politicians like a shower of money that was to bring trade and services many new customers. For Ruth Kirchesch, the reduction of the value added tax is hardly worth mentioning. "When it comes to food, it is practically unnoticeable," says the mother of three children from Küdinghoven.

The family of five needs a whole truckload of fruit, vegetables, bread, milk, juice and other products every week. "But I can hardly buy myself an ice cream for the savings," complains Kirchesch. "We buy the same things as before," she says after the first month.

From the point of view of the stationary retail trade, the tax reduction has not triggered an economic impulse either. Not even for expensive products such as cars, where it's more worthwhile: "Unfortunately, I can't report anything positive about the VAT reduction for my car dealership," says Klaus Linden. He runs the Bachem car dealership in Beuel as an Opel representative. He observes that the customers' buying behavior has become even more cautious. Only after the end of the summer holidays and when things return to normal, he hopes for an improvement from September onwards. An interior decorator in the city center was also unable to gain new customers. She is a bit embarrassed. That is why she does not want to be quoted by name.

Price war better for customers more than tax cuts

Even for high-quality electronics, the tax deduction has little effect on sales. Rather, there have been purchases that were deliberately postponed in order to take in the price advantage, reports Michael Wels of Foto Brell at the Bonn market. This effect has long since fizzled out after four weeks. The pressure of competition from the Internet forces constant price adjustments. This is a far greater motivator than a three percent tax advantage.

Most retailers pass on the tax advantage without deduction, says Jannis Vassiliou, chairman of the retail association Bonn/ Rhein-Sieg/ Euskirchen. "Unfortunately, this measure initiated by the federal government has proven to be ineffective," says Vassiliou. For a kilogram of potatoes at a price of 2.50 Euro, the savings amount to just seven cents. Even conventional discounts offered by the retail trade are considerably larger. Even with a car for 25,000 Euro, the price reduction is not particularly noticeable.

Some shops took advantage of the tax reduction for discount campaigns

Vassiliou is convinced that a reduction in wage and income tax, on the other hand, would have directly flushed more money into consumers' wallets and significantly increased consumer confidence.

Some business people have used the reduction in VAT as an opportunity to launch their own discount campaigns. The fashion house chain C & A advertised in Bonn with a double price reduction. On the other hand, not all retail chains have passed on the tax cut. In the catering trade, price reductions were the exception. Ruth Kirchesch believes that the prices in ice cream parlors have even gone up: "I even paid five Euro for a children's portion in Beuel last week," she says.

Original text: Martin Wein

Translation: Mareike Graepel