In 2007, Germany increased the value added tax VAT) on consumption from 16 percent to 19 percent. According to the supply-side view,

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The supply-side view suggests that increasing consumption tax would lead to a decrease in disposable income, leading to a decrease in the after-tax wage rate. This, in turn, would lead to a decrease in the incentive to work, and hence a decrease in the supply of labor. However, it is not necessarily the case that there will be an increase in potential GDP due to the increase in tax revenue.

In 2007, Germany Increased the Value Added Tax VAT) on Consumption