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Germany rules out tax cuts to boost economy

by Dave Keating | November 24, 2008 at 05:11 am

159 views | 14 Recommendations | 6 comments

German Chancellor Angela Merkel told media outlets through a spokesman today that Germany will not cut taxes in order to boost the economy, a strategy that will likely be employed by the US and the UK.

The German government ruled out cutting taxes to boost the economy in coming months, but Chancellor Angela Merkel said on Monday she would hold talks in January to explore the need for further stimulus measures. Government spokesman Thomas Steg said Germany had no plans to cut income tax or value added tax (VAT) before a federal election due next September. "I can rule that out," Steg told a regular news conference. "The Chancellor is firmly convinced that tax cuts can only be considered after the federal election in 2009." Following weekend reports that Britain was planning a cut to VAT to support its economy, Steg said Chancellor Angela Merkel and her Social Democrat Foreign Minister Frank-Walter Steinmeier had discussed and ruled out any such move in Germany.

Unlike in Germany, this afternoon the UK is set to reveal that it will undertake a plan of cutting taxes on the middle class (whole raising them for the upper class) to stimulate the economy.

Gordon Brown promised today to use tax cuts to inject new vigour into the British economy and reduce the length and depth of the recession.

Mr Brown was speaking ahead of this afternoon's Pre-Budget Report in which Chancellor Alistair Darling is expected to announce a 2.5 per cent cut in VAT - to be paid for in part by increasing income tax on the wealthy after the downturn has concluded.

Speaking to the CBI conference in London, Mr Brown rejected the Conservative argument that tax cuts now will simply store up a "tax bombshell" for the future.

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Paschen

at 05:16 on November 24th, 2008

That does not surprise me. After She and her Interior minister tried to forcefully change the constitution. She is turning out to be the worth leader Germany could have in this times.

SOLARLIFE

at 06:03 on November 24th, 2008

Germany has industry, middle class entrepreneurs. The money will run into new innovative products with new entrepreneurs. No rescue of the old car industry, just balancing the dance floor. Tax cuts don't stimulate in essential crisis, people not consuming, saving money.

Paschen

at 06:46 on November 24th, 2008

SOLARLIFE, Tax cuts for the low income families are desperately needed in Germany and for them even a 100 EURO more every month would helps them a long way.

LotusFlower

at 07:34 on November 24th, 2008

Tax cuts are being considered here in the Uk - the main one being to decrease VAT but also to maybe increase tax for the very rich.

yuls.source

at 10:05 on November 24th, 2008

I am surprised that Germany is able to resist cutting taxes. It seems this fiscal strategy is taking place everywhere in Europe but Germany.

Markus Schlegel

at 22:29 on November 24th, 2008

Well, you see... like to call it mediocracy, like to call it idiocracy: Germans in general, and politicians in particular, have a very hard time admitting failure and doing a u-turn.

Maybe Thatcherism and Reagonomics have been invented elsewhere, but only in Germany have they been mercilessly applied to an extent that it had already ruined the economy as seen from a lower middle class perspective before the additional world economic crisis.

In general, it surprises me that Germany has always tried to fiddle around with income tax instead of giving citizens a consumption tax break. Who would buy anything off the shelf, speculating that he or she will have more money left in the end of the year - as opposed to seeing a lower price tag at the store?

Well, probably this all is high sorcery as seen from a German politician's perspective.

With this political class, so help us God.