by editorial office, ch
“Contrary to Germany, France has recognized the positive effects of lower taxes and is taking action immediately”, Ernst Fischer, President of the German Hotels and Restaurants Association (Federal Association Dehoga), comments on the decision of French President Nicolas Sarkozy to radically cut value added taxes for restaurants from 19.6 to 5.5 percent as soon as July 2009. “Unlike Germany, France appreciates the economic value and capacity of the gastronomy”, says Fischer. “Germany, too, must now understand that reduced tax rates of seven percent will be the best stimulus program for tourism in Germany.”
Getting rid of competitive disadvantages
The French hotel industry had already been taxed at 5.5 percent before, while the German colleagues were burdened with value added taxes at 19 percent. The implementation of reduced rates for French restaurants further compounds the massive competitive disadvantage for the gastronomy in the Federal Republic. “Along the border, this means 450 kilometers of inequality. It is time for this to end”, Fischer demands, urging German politics to take action. Since the EU Council decision of March 2009, the implementation of reduced tax rates for the hotel industry and gastronomy is possible in all of Europe. But the federal government refuses to do so.
“Even when the reasons are so obvious”, Fischer explains. “Including France, 20 of 27 EU states have reduced taxes on the hotel industry. With the exception of Denmark, all neighboring countries charge the hotel industry value added taxes of three to ten percent”, the President of the Dehoga states. “In eleven EU member states, the reduced VAT rates apply to the gastronomy, as well. Counting in France, it will be twelve of them, with Finland and Belgium set to go.”
And no one within Germany could to understand why a salami baguette or a salad is being taxed at seven percent at the bakery or the butcher, while 19 percent are being added on to a meal at restaurants and bistros. “We are not calling for privileges, but equality to the food retail and trades”, Fischer clarifies.
Utilizing positive impulses
“A cut in value added taxes would further result in a huge wave of investments”, says Fischer, referring to a current Dehoga survey among 5,700 entrepreneurs in catering. “Hoteliers and restaurateurs are planning to allocate half of the tax relief for investments. That amounts to 1.8 billion euros”, he explains, “benefiting the trades in the region and the supplying industry, in particular.”
More than a fifth of the VAT benefits are to be used for the reduction of prices. “800 million euros to directly reach our guests. This would result in a significant rise in demand in these difficult times”, Fischer states.
The employees, too, would benefit from reduced VAT rates. Hoteliers and restaurateurs are planning to use 22 percent of funds from tax relief for pay raises and training measures.
“This means that a value added tax at seven percent stands for increased price flexibility. It will allow for higher margins in investments and in the training and compensation of employees. The consequences would be a rise in demand and more jobs,” Fischer accentuates. “This would ensure that the dreaded drops in tax revenue would be short-lived.”
More information on reduced VAT rates in the hospitality industry at www.ProSiebenProzent.de or in the most recent issue of trade magazine TopHotel.
