Column by Stefan Meyerhans: The new VAT level will have little effect on prices

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We have had to put up with many price hikes in the recent past. The war in Ukraine and supply chains disrupted by the pandemic have had and continue to have numerous impacts on product availability and prices.

On the one hand, this is understandable, but on the other hand, this very understanding can be used to our detriment, for example, if prices rise, although in fact there is no reason for this. In more “normal” times, we would be quick to ask “why.” But in today’s environment, it is often not even necessary to point out the current situation in which we agree with price increases.

For some, this can be a tempting situation when it comes to “cash registers ringing” – keyword: “It’s a little meh.” To prevent this idea from even being considered in relation to increasing VAT, at the end of last summer I announced large-scale VAT monitoring, which consisted of three parts:

My team and I fully recorded and assessed price dynamics for a product category of 500 products (feminine hygiene products) from various suppliers. We have also supplemented the Federal Statistical Office’s monthly estimate of 50,000 product prices with the corresponding VAT rate. This made any changes in the prices of these products visible. Ultimately, you were asked to help too: we placed a VAT calculator on our website, with which you could calculate reasonable new prices based on the “old” prices, or vice versa. Anyone who noticed a significant price increase could report it using a web form.

The results are already known: for 87.5% of goods prices have not increased at all. For about 90% of goods, the VAT rate adjustment was not introduced or was not fully accepted. (It should be noted that simultaneous abolition of industrial tariffs could have a multiplying positive effect.)

If you’re wondering why we chose the feminine hygiene products category, the answer is that we wanted to collect this data because next year the VAT on these products is expected to be reduced from 8.1% to 2.6%. We will then fully price this product category so that any price changes are clearly visible.

I won’t be mothballing VAT monitoring tools any time soon: if VAT becomes an issue for funding social spending such as the 13th AHV pension, then I will of course be keeping a close eye on it again. Because current experience confirms that prevention is better than cure.

Source: Blick