{"title":"Price effects and pass-through of a VAT increase on restaurants in Germany: causal evidence for the first months and a mega sports event","authors":"Matthias Firgo","doi":"arxiv-2409.01180","DOIUrl":null,"url":null,"abstract":"This paper analyses the price effects and tax pass-through of a VAT increase\nfrom 7% to 19% on restaurant services in Germany as of January 1, 2024. The\nSynthetic Control Method (SCM) is used to identify the causal effects of this\nreform using prices of goods and services unaffected by the tax change as a\ncounterfactual for restaurant prices. Immediately in January, 31% of the tax\nincrease was passed on to consumer prices. Pass-through increased to 58% in the\nfollowing six months, which corresponds to a causal consumer price increase of\nabout 6.5%. The presumed increase in demand for gastronomy services due to\nhosting the UEFA Euro 2024 tournament did not alter the path of price\nadjustments compared to previous months.","PeriodicalId":501273,"journal":{"name":"arXiv - ECON - General Economics","volume":"50 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"arXiv - ECON - General Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/arxiv-2409.01180","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
This paper analyses the price effects and tax pass-through of a VAT increase
from 7% to 19% on restaurant services in Germany as of January 1, 2024. The
Synthetic Control Method (SCM) is used to identify the causal effects of this
reform using prices of goods and services unaffected by the tax change as a
counterfactual for restaurant prices. Immediately in January, 31% of the tax
increase was passed on to consumer prices. Pass-through increased to 58% in the
following six months, which corresponds to a causal consumer price increase of
about 6.5%. The presumed increase in demand for gastronomy services due to
hosting the UEFA Euro 2024 tournament did not alter the path of price
adjustments compared to previous months.