# Germany tax reform debate 2026 > Live situation record from CLSTR: https://clstr.news/situations/germany-tax-reform-debate-2026 > Updated: 2026-08-05T22:10:10.000Z. Sources: 13. Developments: 2. In July 2026 the German coalition government released a growth and employment program that kept the Minijob system intact while raising the employer’s flat tax contribution from 2 % to 5 %. The change affected roughly eight million low‑wage workers in sectors such as retail, gastronomy and agriculture, and was supported by the FDP as a measure to protect jobs. A few weeks later, in early August 2026, Ifo Institute president Clemens Fuest called for a sweeping overhaul of the value‑added tax system. He proposed abolishing the reduced 7 % rate and applying a uniform 19 % rate to all goods and services, paired with an annual €360 credit for households earning below €55 000. While the reform was presented as a simplification that could raise over €36 billion annually, analysts warned that even with the credit, low‑income families might see a net loss in disposable income. The proposal sparked public debate over price impacts, purchasing power and social equity, adding a new dimension to the ongoing discussion of Germany’s tax policy. ## Timeline ### 2026-08-05: Clemens Fuest pushes for uniform 19% VAT in Germany with low‑income household credit Ifo chief Clemens Fuest wants to replace Germany’s 7 % reduced VAT with a uniform 19 % rate, adding a €360 yearly credit for low‑income households while the state would gain over €36 bn annually. 13 sources. https://clstr.news/cluster/german-economist-clemens-fuest-proposes-ending-reduced-vat-rate-offering-household-credits ### 2026-07-14: Germany retains Minijobs, raises flat tax to 5% Germany’s coalition plan keeps Minijobs but raises the employer flat tax from 2% to 5%, affecting about 8 million workers; the FDP supports the move. 7 sources. https://clstr.news/cluster/german-government-lifts-minijob-tax-eases-dataprotection-rules --- Cite as: Germany tax reform debate 2026. CLSTR, https://clstr.news/situations/germany-tax-reform-debate-2026