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

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Increasing the VAT increases the tax wedge, which is the difference between what consumers pay and what producers receive. This can lower the incentive to work because individuals get to keep less of what they earn after taxes, making leisure relatively more attractive compared to work.

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