DIW chief Marcel Fratzscher predicts the German coalition government will raise the value-added tax (VAT) from 19% to 21%, a move he believes will generate €30 billion but is socially problematic. Fratzscher sees this as a politically convenient solution to a reform backlog, especially given Germany's demographic challenges and projected low growth. He advocates for deeper structural reforms, including eliminating minijobs, increasing property taxes, and cutting environmentally harmful subsidies totaling €60 billion annually, alongside abolishing the spouse splitting tax benefit costing €22 billion. However, he notes that political deadlock, with the Union opposing tax hikes and the SPD unwilling to cut social spending, makes a VAT increase the most likely compromise, despite a recent reduction in VAT for restaurants.