Lower VAT?

The last topic discussed by the EU finance ministers at their meeting in Nice was lowering the value-added tax on certain products. A number of states, including Germany, reject the proposal put forward by France. The daily newspaper Süddeutsche Zeitung predicts that the discussion could soon force Germany to act. "The pressure on German Minister of Finance [Peer Steinbrück] to give in is growing. This is because of Germany's geographical position at the centre of Europe. Six of its nine neighbouring countries want to lower the sales tax. There is concern that if eating out on the other side of the border becomes cheaper, German consumers will start going to restaurants in the border regions. Cheaper electrical appliances at French supermarkets would also be an incentive for Germans to start shopping there instead. The only other countries that support Germany's veto are Austria and Denmark. Steinbrück will therefore have to start looking for new allies and trying to convince them that lowering tax rates won't necessarily boost consumption."

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