Lindner should get involved
IG-Bau wants tax cuts on social housing
4/23/2022 1:26 p.m
The traffic light coalition promises to build 100,000 social housing units annually. According to IG-Bau, the costs would have to go down for success. First of all, value added tax should be reduced to seven percent, and ideally eliminated altogether. However, this would contradict EU law. Finance Minister Lindner should help.
IG Bau is calling for a significant tax cut on the construction costs of social housing. The sales tax rate must “be reduced to seven percent as quickly as possible,” demanded union chairman Robert Feiger in the newspapers of the Funke media group. As soon as this is possible throughout the EU, a reduction to zero percent must follow in a second step.
“Social housing urgently needs a strong boost,” said Feiger. “Otherwise there is a risk that the federal government’s goal of building 100,000 new social housing units a year will fail.”
The traffic light coalition plans to build 400,000 apartments per year, including 100,000 social housing units. For an average social housing with 60 square meters of living space, the VAT exemption would mean a reduction of 33,000 euros in the pure construction costs, as the Pestel Institute calculated for IG Bau. With a reduced sales tax rate of seven percent, the savings amount to around 20,000 euros. The conversion of offices into social housing would also cost around 13,000 euros less if sales tax were zero. With a reduced tax rate, this would be a good 8000 euros cheaper.
EU law contradicts the abolition of VAT
At the EU level, a zero percent tax on housing construction is currently not permitted. From the point of view of IG Bau, however, Federal Finance Minister Christian Lindner should specifically campaign for this.
In order to prevent abuse, however, the tax breaks would have to be linked to the subsidized social housing remaining social housing in the long term, Feiger demanded: “According to the principle: once social housing – always social housing.”
The social housing stock has been in crisis for years. “Currently, around eleven million people are entitled to social housing, but there are only 1.1 million social housing units throughout Germany,” says Matthias Günther, head of the Pestel Institute, to the Funke newspapers. Most recently, an average of only 26,000 social housing units were built each year. “There should be at least five million more social housing units.”