Germany ready to compromise on VAT reduction

19th January 2006, Comments 0 comments

BERLIN, Jan 19, 2006 (AFP) - German Finance Minister Peer Steinbrueck said Thursday that Germany was ready to seek a compromise on reduced value-added or sales tax in the restaurant sector as proposed by France, but which Germany has so far opposed.

BERLIN, Jan 19, 2006 (AFP) - German Finance Minister Peer Steinbrueck said Thursday that Germany was ready to seek a compromise on reduced value-added or sales tax in the restaurant sector as proposed by France, but which Germany has so far opposed.

"Germany will try to find a compromise," Steinbrueck told a news conference following a Franco-German economic summit here with this French counterpart, Thierry Breton.

Until now, the eurozone's biggest economy has opposed a scheme to extend a reduced 5.5 percent rate of VAT in labour intensive sectors, such as construction, home-help and hairdressing.

France, for one, argues that restaurants should enjoy a lower rate of VAT in order to better create new jobs.

The matter is to be discussed by eurozone finance and economy ministers at the next Ecofin meeting on January 24.

Participants would endeavour to find a compromise, even though there the room for manoeuvre was "narrow," Steinbrueck said.

French finance minister Breton for his part said it was "absolutely essential" that a compromise be found.

It was now up to Austrian Finance Minister Karl-Heinz Grasser, whose government was currently holding the rotating EU presidency, to broker a deal, Breton said, adding he would touch on the subject with Grasser on Thursday and Friday.

Negotiations between the different sides were proceeding in a "constructive" mannner, the Frenchman added.

Copyright AFP

Subject: French news

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