Germany plans to raise VAT despite warnings

25th January 2006, Comments 0 comments

25 January 2006, BERLIN - Germany's government affirmed Wednesday plans to hike sales tax in 11 months' time, despite a warning from Economics Minister Michael Glos that it would hurt consumer spending next year.

25 January 2006

BERLIN - Germany's government affirmed Wednesday plans to hike sales tax in 11 months' time, despite a warning from Economics Minister Michael Glos that it would hurt consumer spending next year.

Thomas Steg, deputy spokesman for Chancellor Angela Merkel, said that at Wednesday's cabinet meeting she had been firmly behind the increase in the value-added tax from 16 per cent currently to 19 per cent from January 2007.

Glos pointed out Wednesday that some of this year's growth, officially forecast to be in a corridor of 1.4 to 1.6 per cent, would arise from consumers making early purchases of big-ticket items to avoid next year's higher surcharge, with a dip in sales following.

Both German business and labour have been hostile to the hike, but the government has said it is already budgeting for the extra income.

Glos, who said 2007 could be a difficult year as a result, said Germany's ruling parties had insisted that this year's official forecast be a conservative one, but said it was possible growth would be greater than assumed.

"If that were so, growth of up to 2 per cent would be possible," he told a Berlin news conference.

Glos also announced major legislative proposals for the natural gas industry, saying he would unveil a package next month to allow competitors access "without discrimination" to the gas supply network.

Opening the networks up has been seen as key to more competition.

"Our gas prices are too high," Glos said.

DPA

Subject: German news

0 Comments To This Article